Global Fertilizer Supply Disruptions Help Domestic Producers but Hurt American Farmers

Spiking fertilizer prices due to disruptions at the Strait of Hormuz are enriching fertilizer producers but forcing farmers to plant less wheat and corn.The World Trade Organization says that in March almost no fertilizer passed through the strait, which normally sees the transit of about one-third of the world’s fertilizer supply.The Center for Strategic and International Studies says supply fears are being felt across the Northern Hemisphere just as the planting season begins, prompting many farmers to plant less wheat and corn this year.“No region is completely insulated, and the effects of any sustained disruption could reverberate globally through higher input costs, lower crop yields, and, ultimately, higher food prices,” CSIS said in recent research.United States Department of Agriculture data released this week show that wheat planting is estimated to produce the smallest yield since records began being kept in 1919. Some farmers are switching to soybeans because it needs less fertilizer. The head of the American Farm Bureau Federation is warning that critical raw materials used in fertilizers that flow through the strait — among them urea, ammonia, nitrogen, phosphate, and sulfur-based products — are starting to hurt its member farmers.One Tennessee farmer told the Associated Press this month that he expects to pay an extra $100,000 for fertilizer this season, 40 percent more than a year ago. Senator Josh Hawley said in mid-March that the price of one fertilizer input, urea, had risen by 32 percent.In a letter last month to President Trump, the Farm Bureau’s president, Zippy Duvall, said global fertilizer markets, like oil markets, are highly vulnerable to disruptions in maritime transit routes. Farmers are facing “out-of-control inflation” at the same time that farm margins are extremely tight and many farmers are underwater on expenses, he said.Bankruptcies involving American family farms have skyrocketed in the past two years, a development blamed in part on tariffs. A bipartisan group of former leaders of America’s major agricultural commodity associations is pushing for a tariff exemption for farm inputs.While farmers struggle, fertilizer producers are capitalizing with higher prices and increased exports. America produces much of its own fertilizer and prices have been lower at home than on the global market.Producers in the United States have started shifting to exporting fertilizer, especially since China — the biggest fertilizer producer in the world — has restricted exports to protect its own farmers.Many American farmers bought their fertilizer for this year ahead of the price spikes. There are concerns about even larger supply and price issues for next year’s planting season, especially if the Strait of Hormuz closure drags on for months.“Sending product abroad in a tight market only adds upward pressure on prices in an already high-cost input environment,” the chief executive officer of the fertilizer technology company Phospholutions, Hunter Swisher, told Bloomberg.“Phosphate prices have been elevated for several years, and farmers can only reduce or delay applications for so long before yields are impacted.”

Global Fertilizer Supply Disruptions Help Domestic Producers but Hurt American Farmers

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