High Fertilizer Costs Are Not Because Of Inflation Says ISU
It’s no secret fertilizer prices have been high. Just in the last year, farmers have watched fertilizer prices skyrocket 200 to even 300 percent. With the skyrocketing prices also came soaring profits for fertilizer producers.
That’s why Iowa Attorney General Tom Miller requested a study that looked into these price hikes.
While the final report rose more questions, there was some promising news that came from it; prices are expected to lower as the supply chain improves, ports reopen, labor becomes more available, and energy prices ease.
ISU’s Agriculture Economist Chad Hart said in a Radio Iowa article prices rose because we were seeing difficulties arise in the supply chain and energy market.
There were so many other things going on that you really can't disentangle what is truly supply and demand and fundamental factors impacting the fertilizer market versus what one would consider price manipulation.
He says that these factors worked together to create a “perfect storm” but they did not find enough evidence to say fertilizer companies used their market power to hike up prices. ISU researchers say they need to look at more data to determine if fertilizer companies are taking advantage of inflation.
Back in February, Attorney General Tom Miller wrote a letter to the CEOs of top fertilizer companies looking into why fertilizer prices have been so high. Miller worked with U.S. Agriculture Secretary Tom Vilsack and others, and he requested information from the five major fertilizer manufacturers: Mosaic, Nutrien, CF Industries, Koch Industries, and OCI N.V.
Fertilizer companies say that price increases came from decreased production due to COVID, natural gas production disruptions and price fluctuations, natural disasters affecting production and natural gas demand, and tight global supplies compounded by the Chinese ban on exports and sanctions on Russia and Belarus.