The silver lining of high fertilizer prices

Iowa farmers buy about as much fertilizer as anyone in the country, so they know one thing: prices are too high. In the first quarter of 2022 — due to Russia’s war in Ukraine, pandemic-related supply chain issues, and increased demand — fertilizer prices increased by 30 percent, and never really came back down. The fertilizer price spike has both driven up the price of food and shrunk farmers’ margins.

Given that, it can be tough to see high prices as anything but a burden. Yet they have a silver lining. The high prices encourage farmers and companies to be smarter about fertilizer. Farmers are using data to pinpoint when and where they need fertilizer, so they can use less of it. They are finding ways to bind fertilizers to plants, making less fertilizer have more impact. Finally, they’re rethinking what it means to fertilize a plant.

Fertilizer companies may be enjoying record profits now. But those high profits have a steep downside. They’re driving farmers to new approaches that could soon make traditional fertilizer yesterday’s news.

Many farmers, for instance, are maximizing big data, satellite imagery, and AI-enabled insights to allocate fertilizer use. The old way, adding fertilizer more-or-less uniformly across fields, was always wasteful. According to the U.S. Department of Agriculture, as much as 80 percent of fertilizer is lost to the environment. That’s to say nothing of fertilizer that simply wasn’t needed, as the soil may have already had the necessary nutrients.

When fertilizer is cheap, farmers can stomach some waste. When it’s expensive, though, complex systems which use drone technology, advanced mapping, and digital twinning to identify exactly where and how much fertilizer farmers should apply — are far more financially appealing. These technologies are, if anything, going to become more powerful as AI gets better and better, enabling more precise insights and solutions for farmers. As a bonus, more food processors are demanding reduced carbon emissions from their suppliers. Given fertilizer’s carbon intensity, cutting fertilizer helps farmers comply with those demands.

Farmers are finding other ways to make fertilizer go further. For instance, Source Agriculture has found ways to effectively bind fertilizer to plants, meaning less of fertilizer’s value is lost to runoff. Some farmers have found they can reduce their nitrogen application by half while still increasing their yield. Other technologies can accelerate the breakdown of the nutrition in fertilizer, allowing plants to absorb those nutrients more quickly and have fewer go to waste. When prices are as high as they are right now, such technologies are essentially priceless.

Finally, farmers are rethinking the very nature of fertilizer. Take Pivot Bio, whose products spread microbes that pull nitrogen from the air and feed it into plant roots. This technology involved expensive research and development, but that cost seems much more reasonable when fertilizer is at $247 an acre. Or take the move to fertilizer pellets, which are a byproduct of the renewable natural gas conversion process (which converts methane from cow manure into natural gas to power vehicles and generate electricity). Given the relatively limited number of dairy digesters in the U.S. (roughly 320), it’s hard to scale, making it more expensive. But again, when prices are high, it becomes more appealing.

CF Industries, The Mosaic Company, and their competitors in the fertilizer industry may be riding high right now. Yet, as Proverbs says, “Pride goeth before a … fall.” The high prices they are profiting from are inviting the innovations that will one day crash demand for their product. For farmers, that day cannot come soon enough.

Neal Urwitz is a vice president at Antenna Group, a public relations firm working with companies combating the climate crisis.