NPK Pricing: A Prevailing Concern
In mid-December, the CropLife eNews Retail Chatterbox question asked which of the following topics — fertilizer prices, seed costs, crop protection costs, and economic news — most concerned ag retailers at that point in time. Which topic was top of mind?
Not surprisingly, fertilizer prices topped the list with a 66 percent response. Anticipating that fertilizer costs would continue to climb into 2009, many experts encouraged retailers to purchase their 2009 supply of fertilizer product early. And then oil prices began to drop, and so too did fertilizer prices, leaving many dealers concerned that they could be left holding the bag and even losing money if their grower-customers push to pay lower prices.
“The cost of NPK (nitrogen, phosphorus, and potash) that was bought last summer to have product for the 2009 crop is too far out of whack to what the current farm market gate price of corn and soybeans is,” says ECIL on the Retail Chatterbox blog. “It does not cash flow!”
A week earlier, ECIL vented his frustration with fertilizer manufacturers. “With corn going below $3.00, the majors need to realize the mess they created this summer, ramming up prices to these insane price points! Growers are pushing back hard and we were pressured into buying so that we would have product for fall and not empty bins like last fall (2007).
“Is this a plan by some majors to force independents and cooperatives out of business?” he asks.
Some retailers plan to stand firm on fertilizer prices. One blogger, Sam, points out that “if anybody filled their fertilizer bins last July for more than a 60-day supply, it’s no different than the farmer that signed the contract with Cargill to supply them with corn for $2.40 for a bin back in 2004 or 2005. We all live and learn.”