Fertilizer costs for producers has skyrocketed as of late, and it's making farmers concerned, to say the least.

Emeline Farms co-owner Curtis Sims of MacGregor notes fertilizer is noticeably the biggest single cash cost on the farm, making this a serious issue.

"It has exploded," explains Sims. "That dwarfs the consumer price index increase. The price of fertilizer has doubled, or more than that, since about 18 months ago. So, the amount that has gone up is absolutely astronomical. Farm chemicals have taken big, serious jumps up by 50 per cent and sometimes more."

He notes their biggest cash costs have run away, so to speak. 

"Supposedly there's a lot of other factors," notes Sims. "Some farmers insist part of it is greed on the part of the chemical companies and the fertilizer manufacturers. I have no doubt about that. They have a tendency to charge whatever they can get away with. That's pretty obvious, but it is also true that some of their costs have gone up, especially natural gas for making nitrogen fertilizers. Freight and everything else has gone up, kind of like other costs have. So, their costs are definitely up."

Sims says the fact that Russia and China have ceased exports while other countries have cut back is also part of the problem.

He notes this obviously trickles its way into the rising costs for food, seeing as the rising costs of fertilizers are built into the prices of food in some manner.

"It depends on whether or not fertilizer costs or rising food costs lead the other," adds Sims. "The price of grain, I think, does its own thing a little bit in the immediate outcome, but the companies stand to look at the price of grain being up a lot, so that farmers have more room to pay more for fertilizer. Some of it's legitimate, as they say, from cost increases. For other parts of it, farmer-friends of mine would describe it as greed, at the same time."

Sims explains the tendency for companies is to try and keep the prices high once they get to those points of increase.

"There are pressures that one might see it come down gradually over time," says Sims. "A big latent thing is the big push on environmental concerns and trying to get rid of fossil fuels. And there is no cheap alternative to fossil fuels to make fertilizer. Any other means are much more expensive, so that's the latent problem in the developed world that hasn't really been dealt with in an organized fashion, or a fashion with foresight as to what the practical costs and timelines of changeovers are."

He says one factor that's favourable for them right now is the high cost of grain with respect to those that are buying the food products.

"But a big part of the food product is the processing cost, not the raw material, and one has to remember that." notes Sims. "So, it's fortunate for us that that's taking place. It allows us to still maintain a margin. But the danger, of course, is that the price of grain starts coming down and the fertilizer doesn't, or only in a very delayed fashion."

Sims adds this means there's a strong chance of a real pinch-point in a year or two on the farm in that regard.
 

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