Palm Beach Post

Fla. farmers face costliest season as fertilizer prices soar

By SUSAN SALISBURY

Palm Beach Post Staff Writer

August 07, 2008

http://www.palmbeachpost.com/business/content/business/epaper/2008/08/06/a1a_FERTILIZER_0807.html

MOORE HAVEN — Just about every day, Dennis Wedgworth fields telephone calls from worried South Florida farmers, asking what fertilizer will cost them this fall.

They can't be happy about his answer.

Dennis Wedgworth, at his fertilizer-blending company's Moore Haven plant, expects the price of potash to top $1,000 a ton. A year ago, the cost of one of fertilizer's key ingredients was in the mid-$200s.\uFEFF affected, too, with higher prices at the groceries.

"People will have to pay more for their food," said Dan Davidson, an agronomist with DTN, a business-information provider in Omaha, Neb.

Food prices already are forecast to increase by 4.5 percent to 5.5 percent this year as retailers continue to pass on higher commodity and energy prices, according to the U.S. Department of Agriculture's Economic Research Service. That follows a 4 percent increase in 2007, the biggest annual jump in food prices since 1990.

The higher diesel and fertilizer prices have their origin in the same phenomenon: A sharp rise in global demand, as rapidly industrializing countries such as China and India move to a First World style of life.

"Whether you are talking about steel or concrete or fertilizer, the affluence of the population in China and India has increased, for food particularly," Wedgworth said. "Those countries have such big growth in their middle-income folks. They are demanding a better diet, with more protein."

All fertilizer ingredients are more expensive, from the big three — potassium (in potash), nitrogen and phosphorus (in phosphate rock) — to the minor elements, including manganese and copper.

In the past year, fertilizer costs have soared 77 percent, said Estelle Grasset, spokeswoman for The Fertilizer Institute in Washington.

"The main source behind the demand has been international demand — the need to produce more food to feed more people," Grasset said.

Wedgworth's, the only blender in Palm Beach or Glades counties, has an industrial plant in Moore Haven and sells about 200,000 tons of custom-blended dry fertilizer each year to growers of vegetables, sugar cane and citrus south of Interstate 4. It's part of Florida's 2 million-ton-a-year fertilizer industry, which serves farms, plant nurseries and golf courses, among other things.

Inside the plant, a visitor can see a 10,000-ton pile of salmon-colored salt crystals. It's potash, or potassium carbonate, a major fertilizer ingredient that has been transported by rail from Canada to be blended with other minerals from the U.S. and offshore.

Without it, the nation couldn't produce enough food to feed itself.

That potash heap would have been valued at $2 million a year ago. It's now worth four times as much.

"Potash is our biggest ingredient. We were buying it in the mid-$200s per ton a year ago. It's up to the mid-$800s now," Wedgworth said. "Our producers tell us it will go over $1,000 a ton."

Making supplies even tighter is China's imposition in April of a 135 percent tariff on fertilizer ingredients it had been exporting, which stopped the flow from that country. That affected operations such as Wedgworth's. A year ago, it was buying manganese sulfate from China for $600 a ton.

Today, it's paying $2,000 a ton to get it from South Africa, Wedgworth said.

With no relief from fertilizer costs in sight, farmers are trying to do what they can to survive, such as being more careful with fertilizer applications.

"You cannot survive with a cheap market anymore," Fort Pierce pepper grower David Neill said. "We are looking at every input we do, every step we take now."

Technology might be able to help farmers in the future.

Ronald Rice, a Palm Beach County cooperative extension agent in Belle Glade, said the higher fertilizer costs have brought a renewed interest in slow-release forms of nitrogen that could be applied to sugar cane fields once or perhaps twice a year, instead of four to six times, which is the norm today.

The University of Florida's Everglades Research and Education Center is conducting field trials with the slow-release fertilizer.

Meanwhile, fertilizer makers and blenders stand to do very well in the next few years, said Steve Pinney, a senior vice president for phosphate operations at The Mosaic Co., a fertilizer giant based in Plymouth, Minn.

"There's unprecedented surge in demand. Crop nutrients of all kinds have doubled in usage around the world since 2006," Pinney said. "Increasing commodity prices have told farmers around the world it is time to grow more."

Mosaic, one of three companies with phosphate-mining operations in Florida, produces 9 million tons of phosphate fertilizer annually, solely from Florida.

"The need for food in the world isn't diminishing. There is only so much land that is out there," he said. "Increasing the yield of the crops grown on that land requires nutrients for crops to grow."