Some row crop farmers who are struggling again this season with low commodity prices are blaming consolidation in the inputs market for the higher prices they’re seeing, but ag economists and a leading fertilizer industry analyst say the situation is more complicated.
“If I look at the price changes, I just don't see any patterns where there would necessarily be a big problem,” said Michael Langemeier, associate director at Purdue University's Center for Commercial Agriculture, speaking of input prices in recent years.
Speaking specifically of fertilizer pricing, which increased significantly following Russia’s invasion of Ukraine and has fallen back some but still remains elevated, he said, “even though they're a little bit higher right now, they go up and down tremendously. That's not something you'd normally see if that industry was so concentrated that they had the ability to manipulate the price.”
He said he is concerned about rising prices for diammonium phosphate (DAP) and anhydrous ammonia. "When you plant 99 million acres of corn, that's a lot of demand for anhydrous. ... And we'll probably plant a bunch of acres again next year. That increases the demand."
The issue of input costs was highlighted recently when the Trump administration announced it would work with the Justice Department to look into input prices, a move that was welcomed by farmers.
An Iowa farmer later vented about high input prices on Facebook in a self-described “rant” that has now been liked by nearly 3,000 people and seen by many more.
Benton County farmer Lance Lillibridge said a lack of choice when it comes to buying nitrogen, phosphates and potash is to blame for the high prices. “It’s pretty obvious that there's no competition on the input side,” he said in a conversation last week.
He also has harsh words for what he called “speculative reporting” by USDA’s National Agricultural Statistics Service, whose data on cropland acres planted he says has been flawed.
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“I don't want the USDA to be my enemy. They shouldn't be my enemy. We should be working together and we're not,” Lillibridge said.
Langemeier says NASS reports aren’t perfect, but “without them, we would be really walking blind.” He noted that because of the government shutdown, there was no World Agricultural Supply and Demand Estimates, or WASDE, report released last week.
“That would have been helpful,” he said.
In making the case for looking into input prices, Ag Secretary Brooke Rollins cited increases over the past four years in fuel, seeds, fertilizers and interest costs.
Between 2020 and now, seed expenses are up 18%, fuel and oil increased 32%, fertilizer 37%, and interest expenses 73%, Rollins said at the Ag Outlook Forum last month sponsored by Agri-Pulse and the Agricultural Business Council of Kansas City
ASTA says prices used should be inflation-adjusted
But one trade association questioned comparing costs over time without adjusting them for inflation.
Using nominal amounts "does not paint an accurate picture and suggests seed prices are rising sharply; in real terms, or inflation-adjusted, they have remained flat over the past five- or ten-year periods," American Seed Trade Association President and CEO Andy LaVigne said in a statement.
LaVigne said ASTA recognizes that farmers “are looking for the best options to achieve the highest yields and margins at the end of each harvest. Seed companies are constantly improving seed varieties and technologies, enabling farmers the opportunity to see those increases in yield on an annual basis.”
Bob Maltsbarger, a senior research economist at the University of Missouri's Food and Agricultural Policy Research Institute, said seed prices correlate to the prices farmers are getting for their crops.
“It's not 100% correlated, because ultimately we have new hybrids and genetics coming out, and so those cost more money,” he says. “But in general, the [Prices Paid Index] for seeds has receded a little bit from the peak in 2023 and 2024.”
Josh Linville (X photo)As for fertilizer, an industry analyst said Lillibridge "makes a valid point.”
“When you look at these markets, there are not nearly as many players as there used to be, and that fear of competition in the past did help keep some stability and aggressiveness in that pricing," Josh Linville, vice president of StoneX, said. "And that's not the case as much as it was.”
However, Linville also recently noted on X that while “high grain prices are great …, it does not always make for a better marketing situation.” In early 2022, urea was $910 and corn was $7.49/bushel, meaning it took 121 bushels of corn to pay for a ton of urea.
Today, urea is $375 and corn is $4.22/bu, meaning it actually costs 32 bushels less for a ton.
Garrett Hawkins, president of the Missouri Farm Bureau, said Lillibridge's opinions are "certainly the sentiment you're going to hear in rural communities." Input prices generally follow crop prices, but he says they "have not fallen as fast and seem to be fairly sticky."
Fertilizer's a global market
Linville said fertilizer pricing is not simply a domestic issue. He points to the Chinese pullback on phosphate exports as an example.
“We don’t get anything from China” and have not since the first Trump administration, he said. China, meanwhile, has cut its phosphate exports about in half, at the same time production in the U.S. has been falling.
Linville would like to see more supply of all fertilizers, but the economics are difficult.
“We should absolutely be doing whatever we possibly can to build this stuff at home,” he says
But the cost of building a new nitrogen facility, for example, can be prohibitive. Observing that Koch Industries bought an Iowa OCI nitrogen plant last year for $3.6 billion, he said, “We believe that to build a new plant might [cost] that, or even more.”
Garrett Hawkins (LinkedIn photo)Five countries account for the lion’s share of phosphate exports – Morocco, Russia, China, the U.S., and Saudi Arabia. Environmental groups have been successful at challenging expansion of Mosaic’s phosphate operations in Florida, Linville said.
“Not that many places in the world have large supplies of phosphorus and potassium,” Langemeier notes. “That's an international issue.”
The U.S. imports the majority of its potash from Canada.
In the end, Linville has little hope for the USDA-DOJ effort to look at input prices.
“My current expectation is that it's window dressing to make constituents feel good,” he said. “Studies mean absolutely nothing if there is no action that follows. I am hoping above all else that I am wrong and that there will be action."
Hawkins isn't sure what will come of the USDA-DOJ effort. He said it was good USDA and DOJ are collaborating but added, "I would also be very cautious. ... I'm not sure what results we'll see from it."
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