| (800) 223-5512 |
Answering the Nitrogen Question  By Robby Wilson, Agronomy Department ManagerFor producers, few topics are generating as much discussion in 2008 as nitrogen. With global supply and demand factors reshaping the crop nutrient industry, all the old rules of the game have changed. Two Rivers Cooperative is working hard to help you manage these rules so you have the inputs you need—when you need them, this spring. Not that long ago, the United States was the main destination for crop nutrient companies to market their products. In addition, there were a variety of sources where retail businesses like Two Rivers could obtain crop nutrients. Any given nutrient was (almost) always, readily available from one source or another. Hard to believe, but it wasn’t uncommon to see an over-abundance of supply, as inventories built up season after season. If we needed more, we simply placed an order with the supplier who had the best price and could get the product here the quickest. While there may have been years when the price of a particular nutrient spiked, price changes typically were measured in $10 or $20 increments. Navigating a brave new world All of this appears to have changed forever. Now, at best, there may be two sources of supply; but typically, we only have one. Suppliers now specify order and payment terms that require firm commitments on quantities. Payment arrangements are not made in months or weeks, but within hours. Our choice is basically “take it or leave it,” because that supply will most likely be gone by the next day. And even if it isn’t, the price will almost certainly be higher. Why? There are no extra inventories available in-season, as nations like China, India, and other countries with exploding agricultural economies take every available pound of N-P-K that becomes available on the spot market. They can—and will—pay more to get these crop nutrients. In the past five years, world demand for nitrogen has increased by 14%, phosphate demand is up 13%, and potash demand is 19% higher. These increases alone represent more than 21 million tons of N-P-K—the total amount used by the United States each year. Be prepared to make a commitment You can’t blame suppliers for not assuming the risk of stockpiling inventories for six months or more. In addition to soaring energy prices, the interest expense alone on N-P-K runs nearly $25 per ton. As your cooperative, providing a reliable source of crop nutrients is a commitment we take seriously. In today’s rapidly changing market, this requires working together with you and communicating more closely.
<--Back to February 2008 e-Newsletter |
