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Crop prices are high, but costly fertilizer will squeeze farmers’ profits

a long shot of a fertilizer spreader in a field
By David Clark, CC BY-SA 2.0 /Wikimedia Commons

From Texas Standard:

Unusually high fertilizer prices will cut into many Texas farmers’ profits this year.

Steven Klose, a professor and Extension Economist at the Texas A&M AgriLife Extension Service in the Department of Agricultural Economics, spoke to the Texas Standard about the factors behind the high prices, and when producers can expect relief.

Klose says prices have been rising gradually since the end of the 2020 growing season. In the past four or five years, prices have risen from $00-$400 a ton to almost double that.

"the increased cost of production really tightens things, and we're looking at much thinner profit margins because of it," Klose said.

Some farmers could switch to crops that require less fertilizer, he says. Farmers wouldn't be able to raise their prices to make up for its increased cost.

Commodity prices are up, Klose says, meaning that some farmers will be willing to take on the added cost of fertilizer in hopes of earning higher profits when they sell their crops in the fall.

"You have a demand side push that's helping drive some of these fertilizer costs up," he said.