Throughout COVID and the resulting logistical constraints of the past 18 months, some shortages have been overstated, inflated in their impact, or should have been ignored in hindsight — but the potential for a fertilizer disruption for 2022 is different.
Fertilizer is not toilet paper or cheap clothing from China; regardless of prices or supplies the importance of fertilizer for agriculture will force every farm to change its strategy for the upcoming growing season.
Personally, I have no idea if you should lock in prices on phosphate, potash, or nitrogen today. Prices could be lower in three months — or much higher. My suggestion instead is that you spend a bit of time in the mindset of a manufacturing plant.
For the purposes of this discussion, think of yourself as the head of procurement at an automotive plant and you have to do what you can to secure supplies.
In order to manufacturer a car, you need all of the components delivered on time to ensure no slowdowns in the factory assembly line. What happens if you don’t? Imagine thousands of cars parked, waiting for a one dollar chip in a sixty thousand dollar vehicle. In the case of vehicles, every day without that one part, is a day where the plant is not realizing revenue by getting volume out the door. And every day that passes, that loss increases.
In the case of farming, time is of the essence in the spring and I don’t need to provide you with all of the research showing the impact of seeding or planting date, or starter and in-crop fertilizer on yield. In any season, you cannot afford to be waiting for fertilizer to show up as the planter or drill sits when the soil is fit.
A car plant needs chips, glass, steel, tires, buttons, seats, and more to build the car, just like you need seed, fertilizer, labour, and equipment to get the crop in.
Securing the components for spring is always critical, but in 2022 the usual timelines may not be sufficient to ensure you’ve got all you need on hand when it’s go-time, regardless of price.
Earlier this week, I spoke with Josh Linville of StoneX. He advised the RealAgriculture audience to talk to your retailer and have a discussion around your fertilizer intentions. This may be uncomfortable and contrary to how you typically do business, as keeping your cards close to your vest is more the norm, but the reality is that 2022 is shaping up to be a very different year.
Ag retailers are also going to be stressed lining up supply in a high-cost, high-demand situation; the sooner you can develop your assembly line plan, and are willing to share the pertinent details with your supplier, the better off you’re likely to be during the spring rush.