Fertilizer supply chain said intact

Sheldon Toews is getting phone calls and emails from all the fertilizer retailers in his area advising him to buy now before prices escalate in response to the COVID-19 pandemic.

He thinks they are using a global health crisis to their advantage and are guilty of “fear mongering” and “price gouging.”

“I just find it unethical to use that as an excuse to drive prices up,” said the Lethbridge, Alta. farmer.

Toews has been told by retailers that they have sufficient supply of product but they are facing substantially higher prices when restocking their shelves.

But he has long been told that fertilizer prices closely follow crude oil prices and that commodity has absolutely tanked as a price war has erupted between Saudi Arabia and Russia.

The West Texas Intermediate crude oil price briefly dropped below US$21 per barrel last week, down from $63 in early January.

“Explain to me why fertilizer prices are going up?” said Toews.

Garth Whyte, president of Fertilizer Canada, said Toews is operating under a mistaken belief.

“Fertilizer prices aren’t linked to oil prices,” he said.

“Fertilizer prices are based on supply and demand.”

However, there is a link to natural gas prices, which is a key input in the production of fertilizer. And natural gas prices are also down.

Whyte said factors that could push prices higher under the current environment are transportation disruptions and the plunging Canadian dollar, which would drive up the cost of fertilizer products sourced from the U.S.

He said the fertilizer industry is doing everything in its power to ensure farmers have the product they require in time for spring seeding.

The retailers he has spoken to are not issuing dire price warnings, at least they shouldn’t be because nobody knows where prices are heading.

“What they are doing is encouraging farmers to buy now because it’s available and they’re not sure if there may be a break in the supply chain,” he said.

“We don’t know how things are going to pan out in a week or two. That’s why they would be encouraging them to buy, not because of prices.”

The U.S. Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency has designated the country’s fertilizer employees as essential and the fertilizer industry as one the nation’s critical infrastructure industries.

“We want something similar in Canada,” said Whyte.

Federal Agriculture Minister Marie-Claude Bibeau issued a statement last week that provided some relief.

“The continued movement of agri-food products and inputs, both home and abroad, and the ongoing delivery of essential food-delivery services, are essential to Canada’s plan to manage COVID-19,” she said.

Whyte said that is a good first step but he wants something more concrete like the official designation that has happened south of the border.

“We want more,” he said.

The concern is that some fertilizer movement could be disrupted by the recent agreement by Canada and the U.S. to restrict “non-essential travel” across the border.

This is the peak season for fertilizer movement as retailers are getting products in place for spring planting.

Canada ships nitrogen and potash fertilizer south to the U.S., while the U.S. sends phosphate north.

Whyte estimates that 75 percent of fertilizer products are already in place and ready to be distributed to farmers. It is the remaining 25 percent he is worried about.

But as long as fertilizer is officially deemed an essential commodity there should be no problem with farmers getting what they need.

“It looks like we’re ready. We’re well positioned,” said Whyte.

“As sectors go, we’re in pretty good shape.”

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