U.S. farmers face supply shortages, higher costs after Hurricane Ida By Reuters
By P.J. Huffstutter and Mark Weinraub
CHICAGO (Reuters) – Troy Walker’s phone will not stop ringing at his Kansas farm cooperative, with growers needing fertilizer for their wheat fields in the coming months.
Caleb Ragland, a Kentucky soybean and corn farmer said that shelves at the local farm supply store are frequently empty of crop chemical glyphosate. This situation may get worse.
Bayer’s Louisiana glyphosate manufacturing facility remains closed following Hurricane Ida. The hurricane ravaged the Gulf Coast in August. It further complicated logistics and supply chains that have already been tightened by global shortages of chemical and fertilizers.
Ragland from Magnolia, Kentucky, said that Ida “was like a heavyweight boxer who went 15 rounds and then threw an uppercut at the farmer.” Things were bad enough. Ida only made things worse.
Ida disrupted soybean and grain shipment from the Gulf Coast. The Gulf Coast accounts for around 60% of U.S. exporteds. At a time where global crop supply is tightening and China demand is strong, Ida made it worse.
The storm’s ripple effect is affecting the movement and production of certain fertilizers and other crop chemicals before harvest in the United States. The pandemic caused severe disruption to the agricultural and food supply chains.
Farmers who were hoping for booming incomes this year are now at risk from rising input costs. After years of being below break-even, crop prices have jumped to an all-time high. Ragland, along with other farmers, have begun to rethink what crops they plan on planting in spring. It is more profitable for them to use less fertilizer.
Ragland explained, “The current nitrogen prices are making it difficult to look at my corn acres.” It makes me wonder if we could grow soybeans there.
According to most current data, before Hurricane Ida the U.S. Agriculture Department predicted that there would be a 2.2% rise in corn input prices for every acre planted by 2022. The increase was due to higher crop prices and disruptions in supply chains.
Marc-Andre Fortin (Director of North American Crop Protection at Farmers Business Network), an online marketplace for farmers, stated that global supplies of raw materials were low.
Imports of glyphosate containers shipped into the Port of New Orleans were down 71% from the same period a year earlier and herbicide container imports were down 1.2%, according to Panjiva, the supply chain research unit of S&P Global (NYSE:) Market Intelligence. Potash imports to New Orleans fell 14.8%.
Ida then closed Bayer’s Luling, Louisiana glyphosate facility. According to Bayer, this plant supplies all active ingredients for Bayer Roundup branded ag herbsicides in the United States.
Bayer has closed its plant since August 28. According to the company, it hopes to restore power in a matter of weeks. It also said that they are working on wind damage repairs and system testing.
Global glyphosate supplies were already tight as flooding, COVID-19 outbreaks and congested ports snarled production and exports in China for months, said Allan W. Gray, executive director of the Purdue University Center for Food and Agricultural Business.
Gray stated that chemical companies are now rationing their supplies for farmers and other users.
It is also difficult to get fertilizer quotes. Walker and MKC staff have been unsuccessful in obtaining price quotes for fertilizer suppliers from Kansas Farm cooperative MKC. Walker stated that the suppliers do not know whether they have anything for sale and so Walker turned away customers.
For months, retailers have been plagued by such problems. China, which is the top exporter worldwide of phosphate, has temporarily suspended urea fertilizer and diammonium fertilizer exports to satisfy domestic demand.
More recently, fertilizer producer CF Industries Holdings Inc (NYSE:) halted operations at two United Kingdom manufacturing complexes, citing high costs for feedstock, a key raw material used in nitrogen fertilizers.
Canada’s largest potash producer Nutrien (NYSE:) Ltd is sold out in North America through at least the third quarter, and global stocks for potash are tight for the rest of the year, said Ken Seitz, executive vice president of potash at Nutrien Ltd.
Ida tightened fertilizer supplies further, when CF Industries and Incitec Pivot Ltd shut plants because of the hurricane and declared force majeure for customers.
Prices rose as the supply chain became more complicated. According to Josh Linville of StoneX Group Inc., director of fertilizer, prices soared after the hurricane. A New Orleans barge of Urea set to sail in September to U.S. and Canada, traded for $450 per ton prior to the storm.
Linville stated, “In the fertilizer industry, everything that could go wrong will go wrong.” “It is death by a thousand cuts.”
Keeff Felty (54), a wheat and cotton farmer, stated that the situation has spiraled. After local farmers failed to fulfill his orders, Felty is now studying the soil to determine where fertilizer can be cut. He also paid an outside company to transport some fertilizer in-state.
“The prices went up between Monday and Wednesday,” said Felty. “And by the night, they had gone out.”