Price of fertilizer and prices received for crops have been relatively volatile since 2002

Price of fertilizer and prices received for crops have been relatively volatile since 2002

Fertilizers provide nutrients (such as nitrogen) essential in the production of crops. The amount of fertilizer farmers use can be affected by changes in the price of the fertilizer, variation in production practice (such as the type of tillage employed and crop mix), and the price received for the crops. From 1960 through 2002, both fertilizer prices paid and crop prices received by farmers increased in tandem at a fairly modest rate. Between 2002 and 2008, annual fertilizer prices paid by farmers increased rapidly (generally much faster than increases in crop prices received by farmers) and became more volatile. Fertilizer price increases through 2008 were largely driven by high energy prices and the record costs of natural gas (a basic input to produce nitrogen). In response to record fertilizer prices in 2008, farmers reduced their use of fertilizers, contributing to a decline of 18 percent in fertilizer prices through 2010. Fertilizer prices recovered somewhat through 2012—driven by strong domestic demand for plant nutrients due to high crop prices, and limited domestic production capacity—before declining again. Since June 2017, fertilizer prices have trended upwards, along with crop prices received. Using an index that sets 2011 price levels to 100, farmers paid 66.7 for fertilizer and received 86.8 for their crops in 2018. In other words, farmers paid less for fertilizer and received less money for their crops in 2018 than they did in 2011. This chart appears in the USDA, Economic Research Service data product, Fertilizer Use and Price, updated October 2019.

Last updated: Wednesday, February 26, 2020

For more information, contact: Roberto Mosheim