Welcome to Corn Comments, I’m DaNita Murray, Executive Director at South Dakota Corn. We are brought to you by the South Dakota Corn Utilization Council, a volunteer group of farmers who promote corn marketing in this state, the US and around the globe.
Despite the cost of natural gas in the U.S. being relatively cheaper than many fertilizer-producing areas of the world, the price of nitrogen fertilizer in the U.S. has continued to rise in concert with prices in areas with higher costing natural gas. A resulting rise in margins for U.S. manufacturers should, in theory, encourage expansion of production and higher capacity utilization for the industry. Instead, market power has allowed manufacturers to maintain higher prices at the expense of U.S. farmers. In fact, recently, a Bloomberg article showed that recent earnings reports indicate record profits for fertilizer companies. When input costs go up, a farmer’s profit margin shrinks. Fertilizer companies have certainly shown that they increase prices simply because they can do so.
Welcome to Corn Comments, I’m DaNita Murray, Executive Director at South Dakota Corn. We are brought to you by the South Dakota Corn Utilization Council, a volunteer group of farmers who promote corn marketing in this state, the US and around the globe.
Despite the cost of natural gas in the U.S. being relatively cheaper than many fertilizer-producing areas of the world, the price of nitrogen fertilizer in the U.S. has continued to rise in concert with prices in areas with higher costing natural gas. A resulting rise in margins for U.S. manufacturers should, in theory, encourage expansion of production and higher capacity utilization for the industry. Instead, market power has allowed manufacturers to maintain higher prices at the expense of U.S. farmers. In fact, recently, a Bloomberg article showed that recent earnings reports indicate record profits for fertilizer companies. When input costs go up, a farmer’s profit margin shrinks. Fertilizer companies have certainly shown that they increase prices simply because they can do so.