Have You Seen the Price of Nitrogen Fertilizer?
In April 2001, I wrote an Ag News and Views article titled, Why are Nitrogen Prices so High? Ten years later, the question persists, and, yes, nitrogen fertilizer prices are even higher.
The price of nitrogen fertilizers is directly tied to the price of natural gas (methane). The manufacturing of 1 ton of anhydrous ammonia fertilizer requires 33,500 cubic feet of natural gas. This represents most of the costs associated with manufacturing anhydrous ammonia. When energy prices are high, nitrogen fertilizer prices will tag along.
A reasonable question to ask is, "Why is so much natural gas used in the manufacturing of nitrogen fertilizers?" Keep reading and I'll try to explain it.
Nitrogen is all around us. In fact, the atmosphere is 80 percent nitrogen. Unfortunately for our pocketbooks, it is not in a form plants can use. Small amounts of nitrogen are converted to plant-available forms and sent to earth in lightning strikes. Some is returned to the soil when rainfall washes pollutants out of the air. Free-living, blue-green algae convert small amounts of atmospheric nitrogen to plant-available forms. Legumes host bacteria in their roots that can convert atmospheric nitrogen to a plant-available form. However, these mechanisms do not supply nearly enough nitrogen for high-yield agriculture, except for legumes.
Here's where natural gas (CH4) comes in. In 1910, it was discovered that you could combine natural gas with the atmosphere at very high temperature (about 900 degrees F) and very high pressure (between 2,900-14,700 pounds per square inch). When this is done, anhydrous ammonia gas (NH3) is created. This is called the Claude-Haber ammonia synthesis process.
Natural gas is used in this process in two ways. First, it is used to react with the atmosphere. The natural gas is used to supply hydrogen to the reaction. Second, it is used to create the high temperature and pressure necessary for the process to occur.
What if I use a different form of nitrogen than anhydrous ammonia? Why does my fertilizer cost more?
That's another good question. Most of the other popular forms of nitrogen fertilizer are made with anhydrous ammonia. Urea is formulated by reacting anhydrous ammonia with carbon dioxide at high temperature and pressure. Ammonium nitrate is formulated by reacting anhydrous ammonia with nitric acid in a very corrosive manufacturing climate. Solution liquid fertilizers (28 to 32 percent N) are composed of about one-half urea and one-half ammonium nitrate. It's pretty hard to find a formulation of nitrogen fertilizer that doesn't use natural gas in its manufacture.
There are a couple of other reasons why nitrogen fertilizer prices are high now. There is a lot of competition for fertilizer, both foreign and domestic. The foreign competition comes from countries like China trying to increase food production. Domestic competition exists because almost every crop we grow is selling for very high prices, leading farmers to plant and fertilize more.
Transportation is also a major component of fertilizer cost. Since fuel is expensive, transportation costs are high. This further adds to the cost of fertilizer.
What can you do about the high nitrogen prices? Should you discontinue using nitrogen fertilizers until the prices come down?
You probably don't want to quit fertilizing and de-stock. Since cattle and crop prices are very high, nitrogen fertilizer is still profitable even at elevated prices. However, you may be able to fine-tune your fertilizer program for more economical results.
One thing you can do is collect soil samples to determine how much residual nitrogen is in your soils. If you want to consider residual nitrogen in determining your N recommendation, take both 0- to 6-inch and 6- to 12-inch samples. The results from residual nitrogen samples in our Oklahoma-Texas area are good for only about three to six months after sampling due to potential losses after this time.
Another thing you can do is to prioritize your fields and fertilize your most productive ground first because it will use fertilizer most efficiently. Then fertilize the next most productive, etc., until you run out of fertilizer money. This is a better strategy than simply using some on all acreage.
Nitrogen fertilizer prices are high, but, with crop and livestock prices also high, it is still profitable if used wisely.