Fertilizer a Key Variable in Corn, Soybean Crop Cost Containment
Corn and soybeans are cheap and getting cheaper. Profits may be out the window for this year on a lot of row-crop farms. Yet the downturn was well foreshadowed. Now that it's arrived, there's a new buzz term in the Corn Belt: cost containment.
"It appears that the key for a while will be cost containment," says Agriculture.com Marketing Talk senior contributor elcheapo. "I've always found it interesting to compare the cost of items in different areas. I've often felt we are in a black hole in my area, where the fertilizer is higher and basis is wide."
Fertilizer is actually the rare input that's seen as declining in cost in the next year or so, says University of Illinois Extension ag economist Gary Schnitkey. But the average decrease of less than $20 an acre for corn and around $6 an acre (for Schnitkey's state of Illinois) isn't enough to make up the discrepancy between projected crop income and a bottom line that's not in the red. And these declines are far from sure things.
"These cost decreases are based on further decreases in fertilizer prices, an uncertain proposition. Increases in demand for natural gas caused by another cold winter in 2014 could result in higher fertilizer prices for 2015," Schnitkey says. "Moreover, much of the raw ingredients for fertilizer production is located in politically sensitive areas of the world. Supply disturbances in those areas could result in higher fertilizer prices."
You can't do much to control the prices you'll pay for fertilizer, beyond going to a different supplier. There are ways, however, to get more out of what you pay, and that's now become a big target for farmers who are already looking ahead to a year with little or no crop income because of a depressed marketplace for corn and soybeans.
"If you use enough dry fertilizer to take it by the semi load, it's way, way cheaper to have your own cart and bypass the local co-op or whomever," says Marketing Talk esteemed adviser Hobbyfarmer. "I have three places to call for direct shipping right to my farm. Just takes an auger and somewhere to put it, as trucks will not wait for you to spread it. If you have your own semi, even better. Been pretty easy to buy a good serviceable 8-ton spreader for under $3,500. That's about the savings on one load of 11-52-0."
Also consider buying your fertilizer during different times of year. If you've got the ability to store it for a little longer period of time, you may be able to net considerable savings in price.
"Seems to me the big savings would be buying in the off-season. I'm not set up to store fertilizer and don't know if I want to be," adds Marketing Talk senior contributor clayton58. "Almost all my fertilizer goes on at planting time with the air seeder, so that eliminates off-season applications."