Agronomists are scrambling to meet customer needs as requests for prepaid fertilizer have begun flooding into offices. Normally this type of activity gets rolling in December with many farmers signing contracts between Christmas and New Year’s Eve. The endeavor serves a double purpose: lock in chemical, fertilizer, and seed input costs and do some end-of-year tax planning.

That crop planning process for the 2022 season has been put in overdrive this year. That’s because fertilizer costs are jumping on a weekly basis. The movement has been so swift that quotes given on Friday must be signed by Monday or a new quote must be developed.

“The current activity mirrors what I normally see the last week of the year,” said one agronomist who went on to email a dairyman at 12:58 a.m. in the transition from Friday evening to Saturday morning. “I’ll call you in the morning,” the email continued. “Guess I’ll call this morning as it’s already the a.m.” That agronomist clearly had completed a lot of proposals that day.

As for the input costs . . . fertilizer has been on an upward trajectory. Nitrogen-based fertilizers are running about double from a year ago. China, a major exporter of fertilizer, has placed some curbs on exports. Then there’s the issue of supply chain disruptions and major backlogged ports in the western U.S.

On the chemical side of the equation, prices are approaching all-time highs. Seed costs could follow suit.

For those who have the wherewithal, reaching out to suppliers for prepay options would be a prudent decision. That’s because inflation also has begun to approach levels not seen since the early 1980s. Nearly everyone involved in the cropping enterprise projects that costs will continue to escalate through the fall, winter, and into the spring.

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(c) Hoard's Dairyman Intel 2021
October 25, 2021
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