Fluctuating fertilizer prices hurt farmers, dealers

Freedom New Mexico: Argen Duncan Curtis Breshears of SPRA-Green Inc. saw his fertilizer sales drop by two-thirds last year because of high prices. However, decreases in fertilizer costs this winter have things looking better, he said.

By Argen Duncan: Freedom New Mexico

Fueled by roller coaster oil prices, high fertilizer prices are hurting not only farmers but people selling the products.

But oil price decreases this winter may offer some relief.

Starting about last January, prices for fertilizer started climbing until they doubled last year, said Ted Hairgrove, manager of DeBruce Ag Service in Farwell.

“It’s nearly all the fertilizer products,” he said.

Curtis Breshears, owner of SPRA-Green Inc. in Portales, said this winter, fertilizer dropped to half of the peak cost. However, prices have started to rise slightly again.

“Now where it’s going to stop, I don’t know,” Breshears said.

Hairgrove, who does most of his fertilizer business with farmers, said he thought prices might stabilize, but he wasn’t sure.

“I don’t have a crystal ball,” he said.

Breshears, who mixes fertilizers and sells mainly to farmers, said the increase in prices cut his business down to a third of normal.

Now, the business is looking better, but it’s not “out of the woods” yet, he said.

If prices rise again, Breshears plans to buy only what he knows he can sell on a weekly basis.

Even though lower prices are giving both farmers and fertilizer dealers a better outlook, problems may still remain.

Hairgrove said dealers may be stuck with fertilizer they bought at high prices and is now hard to sell. If they sell at more recent lower prices, they lose money.

Most dealers average the high and low prices, and sell the fertilizer at that rate, he said.

Also, not all of the ingredients have dropped in price. Costs for nitrogen and phosphorus have decreased, but potassium prices are still high, Breshears said.

If potassium costs don’t decrease, he said, farmers won’t use it again this year.

Fertilizer costs are tied to the prices of certain crops, according to Breshears and Hairgrove.

Prices for crops such as corn and milo increased last year, driving up the demand and cost of products to fertilize them, he said. Breshears said the potential to make ethanol out of corn also caused high prices.

Additionally, Hairgrove said, a weak dollar made American fertilizer more attractive to other countries. The resulting exports decreased the supply and increased the price in the United States.

Breshears said another factor in last year’s increase was a decrease in imported nitrogen. In the past, China was a cheap source for the product, but last year the country kept more of the fertilizer for itself.

Lower prices for commodities and for petroleum, ammonia and sulfur — some of fertilizer’s raw materials — caused the recent drop in fertilizer prices, Hargrove said.