With the price of corn relative to fertilizer, farmers aren’t making as much money as people would expect. Corn futures on the CBOT range between roughly $5.50 and $5.90. Even with these favorable prices, Randy Poll, president of Michigan Corn, is paying three times as much for nitrogen than he did last year.
“I got some bought in the high $180s [per ton] last year, and now I’m paying $550 to $600 [per ton] for the same product,” he says. “That’s a little bit hard to understand how it could change that much. I understand there’s a lot of transition issues, I’m not sure if it’s total product, but logistics is what I’m hearing from my suppliers.”
Farmers across the country are experiencing the same situation. According to a study released this week from Texas A&M, anhydrous increased nearly $700 a ton in a 10-month timeframe.
“Profit-wise, if things don’t change, we’re probably not going to make as much as what we did back then,” says Poll. “If they haven’t talked to their loan officer, I think a big challenge is going to be is when you go to your banker and say, ‘I need three times as much money to cash flow my inputs this year versus a year ago.’ Could be in for some rude awakenings.”
With these prices, Poll is expecting several consequences.
“I think the end result is going to be [possibly] lower yields, which is going to be hard to get a real handle on because weather is still a big influence,” he says. “You may see some [acres] switch from the normal crop rotation going to more soybeans because one, they can afford it or two, they are going to say ‘I don’t want to put that much risk out there.’”
The National Corn Growers Association has sent a letter to CF Industries to withdrawl tariffs on nitrogen imports from Trinidad & Tobago and Russia.
“That’s one thing an organization can do as a group more than an individual—Michigan is part of that group that is doing that, hoping we can carry some weight with that and express options with farmers all over the United States,” says Poll.