Iowa fertilizer sales up 14%, despite rising costs

Iowa's 2022 fertilizer sales were up nearly 14 percent from 2021 — surprising given farmers’ complaints they would have to ration fertilizer this year due to rising costs.

Just like Americans once rushed out to buy toilet paper because of feared price hikes and shortages, farmers stocked up on fertilizer last fall, according to Chad Hart, an Iowa State University economics professor and crop market specialist.

Farmers also wanted to maximize yield with corn prices above $7 a bushel.

But unlike toiler paper hoarding, most farmers don’t have the space to store extra fertilizer and most likely applied it all — perhaps at higher rates than needed, which may harm Iowa’s water quality.

“They ran out there to make sure they got the fertilizer they needed to produce that crop,” Hart said. “The financial concerns are what drove the application in 2022. Hopefully this was a temporary offset rather than a more permanent shock to the system.”

Iowa farmers bought 5.27 million metric tons of fertilizer from July 1, 2021, through June 30, up from 4.65 million tons in 2021 and up 45 percent since 2020, according to sales data reported by the Iowa Department of Agriculture and Land Stewardship.

The 2022 sales are the highest Iowa has seen since at least before fiscal 2014.

An ISU study in June found fertilizer prices are two to four times higher than in September 2020.

Reasons for the spike include the rising cost of importing ingredients, such as ammonia and phosphate rock, from other parts of the world because of war, COVID-19 restrictions and trade disputes, ISU found.

Lance Lillibridge, a Benton County farmer and chair of the Iowa Corn Growers Association, asked at a farmer roundtable in June whether he should cut fertilizer and accept reduced yields.

“Are we profitable? Yeah, we’re profitable right now,” he said. “But we’re not going to be profitable next year. That’s extremely concerning.”

Iowa farmers are poised to make nearly $1,500 gross income for each acre of corn, based on the most recent prices. Even with inflation, fertilizer costs about $200 per acre. There are additional costs, such as rent, which could be $200 to $400 an acre, Hart said.

Iowa sales of anhydrous ammonia, applied to farm fields before planting, often in the fall, rose 35 percent last year. Farmers bought three times as much mixed-grade fertilizer in 2022. Hart noted these blends have lower levels of nutrients, including nitrogen and phosphorus, and usually are cheaper.

“They backed off applications in the spring and searched for fertilizer blends that offered a relative price benefit,” he said.

Applying fertilizer in the fall can cause more runoff into lakes and streams, many of which serve as the source of drinking water for nearby communities.

“When you apply nitrate in November, that chemical has got to sit there for six months before the corn really starts using it aggressively,” said Chris Jones, a University of Iowa research engineer who studies water quality. “There’s a lot of opportunity for loss.”

Jones said Iowa farmers need to think less about yield and more about their costs and about the environment.

“The risk of applying too little (fertilizer) falls on the farmer,” he said. “The risk of applying too much falls on the public. When that’s the calculation in the mind of the producer, they are going to make decisions that are based on their own self interest rather than the public’s.”

Hart said he thinks it’s possible 2023 will be a correction from heavy fertilizer application in 2021 and 2022.

“Hopefully, farmers are doing that soil testing, checking to see how they are doing with nutrients. We do know we could have banked nutrients out in the fields,” he said. “We want to take advantage of that opportunity and not overapply, given what we’ve got out there.”

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