Farmers paid more for their nitrogen fertilizer last spring than they had in many years and are worried about similar circumstances in 2004.
The best guess is that prices won’t reach last year’s peak, according to Manitoba Agriculture.
“We’ve got projections lower for this spring than last spring,” said farm management specialist Keith Kyle.
That said, he anticipates spring prices will be higher than they were in the fall when anhydrous and liquid fertilizer sold for 29 cents per pound and 37 cents per lb., respectively. He expects anhydrous to rise three cents per lb. and liquid to be up seven cents per lb. from those levels.
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“A lot of guys are going to look for alternatives to cut down their fertilizer bills,” said Kyle.
His colleague Lionel Kaskiw thinks nitrogen fertilizer prices will have a serious impact on cropping decisions.
“I know from talking to producers we’re looking at a lot more of the pulse crops going in,” said the regional crops agronomist.
But that strategy could backfire.
“The only way they can scrimp on nitrogen is by going to more pulses and by going to more pulse crops, they’re just going to put more strain on the marketplace. It’s kind of a Catch-22 situation.”
He surmises that a portion of the nitrogen savings realized by seeding crops like peas, beans and soybeans will be spent on giving extra doses of fertilizer to canola, a crop that experienced a market rally in 2003.
Alberta Agriculture crop specialist Doon Pauly expects growers to shy away from buying nitrogen fertilizer if prices are too high in the spring, especially after two years of drought.
“People are looking at managing their costs more than they ever have been in the past.”
One tactic he has heard farmers talk about is waiting until the end of May or June to make their purchases, in hopes that prices will fall.
Pauly discourages farmers from that plan, primarily because many of them won’t follow through with it.
Cereal crops would have to be top-dressed by the third week in June, during the brief lull between seeding and herbicide application.
“If they’ve had a busy seeding season, the last thing they want to think about is going out and spreading fertilizer before they get geared up for spraying.”
Another disadvantage with top-dressing is that it relies on rainfall to wash the fertilizer into the root zone. There are also extra application costs.
Pauly is reluctant to advise producers who have no experience growing pulse crops to plant them this spring simply to take advantage of their nitrogen-fixing ability.
“If they’re in financial survival mode, I’m not sure it’s best to go into a new crop.”
He is also reluctant to hazard a guess where nitrogen prices are headed. That will all depend on spring moisture conditions, which could swing prices 25 percent up or down depending on whether it’s wet or dry.
Kyle said while his fertilizer price estimates are down from spring 2003, they still add up to high input costs for farmers this year. For example, the operating cost for a Manitoba wheat crop is estimated at $115-$120 per acre, when in past years it was less than $100.
“There’s only two or three crops I can pencil out and make work with the prices we’ve got for some of our commodities right now.”
Canola, flax and sunflowers should be able to pay for themselves in Manitoba given projected market conditions, he said.
