Just in Time in an Untimely Market

This Week In Ag #162

“Just in time.” This methodical approach to applying crop inputs has been rapidly gaining popularity. Fair to say, it’s now become a cultural norm. As with most farming practices, it’s related to economics.

Now, it’s not just about timely application, but also about timely purchasing. Except for the Covid-era span between 2021 and 2022, and the financial crash in 2008, fertilizer prices have never been higher.

Less than a month ago, our US Secretary of Agriculture assured us that rising fertilizer costs “shouldn’t be too disruptive for US farmers,” citing 80% of farmers locked in their fertilizer last fall. Data released last week by the American Farm Bureau refutes that notion.

In a study of over 5,700 farmers, 70% said fertilizer prices are so expensive that they will not be able to buy all the fertilizer they need. There are significant regional differences in that sentiment, with those farming along the coasts (where high-value specialty crops are grown) feeling strongest about the detrimental impact of soaring fertilizer prices. Still, about half of Midwest farmers believe they won’t be able to afford enough of nutrients.

Just 19% of Southern farmers pre-purchased fertilizer last fall. Granted, many in the South seemingly aren’t sure what they will plant until they pull their planters out of the shed. That’s because they have several options, based on their extended growing season. They’ll monitor crop prices — corn, rice, cotton, peanuts, wheat, sorghum, soybeans and more — to determine which crops to raise. So they may not determine their fertilizer needs until the season approaches. Still, 19% is an alarmingly low number.

West of the Rockies, where most of our high-value specialty crops are raised, just 31% of growers pre-purchased fertilizer. Even in the Midwest, where commercially viable cropping options are often limited to corn and soybeans, one in three farmers had not pre-purchased fertilizer.

“Just in time” may have been born out of necessity, but it’s a mixed bag. Surging fertilizer prices in 2021 forced many farmers to reassess how and when they deliver nutrients. Better education, such as utilizing the 4Rs (right source, right time, right rate, right place), offered agronomic and stewardship benefits. Drops in crop prices – while fertilizer prices remained historically high – caused many farmers to become more judicious in what they applied. Rising interest rates, and even the availability of credit, dissuaded many from fall applications. Equipment advancements, such as larger, taller self-propelled sprayers and Y drops (attachments on a spray boom that deliver fertilizer to the base of plants) make applying nutrients later in the season more practical. Technology such as tissue sampling can determine in-season nutrient levels, enabling farmers to react quickly to deficiencies and predict next year’s needs.

Now throw in a US war, geo-political uncertainty throughout the world, significant supply chain disruptions, supply manipulation by certain countries and allegations of price gouging by major suppliers. And it’s easy to see why farmers are trying put time on their side.