“The world has realized that food can be a weapon and it is being currently used,” Svein Tore Holsether, CEO of Yara International, one of the world’s largest suppliers of plant nutrients, told Reuters on the sidelines of the World Economic Forum in Davos.

He said the direct impact of Russian sanctions has removed at least 15 per cent of global fertilizer supply and the indirect impact was even more severe due to disruptions of supply chains and the impact of gas price rises.

“We need to work on an emergency response for the most vulnerable. For that we urgently need to unlock funds of the world food programme (WFP), which has a $10 billion funding gap,” he said (all figures US$).

David Beasley, the executive director of the United Nations’ World Food Programme, said this month even before the war in Ukraine some 276 million people were hungry globally.

WFP is believed to face a $10 billion fund shortage as food prices, fuel and shipping costs are skyrocketing while donors such as oil-rich Gulf countries are not contributing agreed funds.

Some 25 million tonnes of corn and grains are stuck in Black Sea ports because of the war in Ukraine and Russian grains and fertilizers exports are also disrupted by sanctions.

“Currently, we have an extreme combination of events when food supplies are going down, fertilizers supplies are doing down, gas supplies are going down and prices for gas and fertilizers are rising,” said Holsether.

Global fertilizer production depends heavily on natural gas and the EU receives 40 per cent of its gas from Russia.

In March, Yara curtailed its ammonia and urea output due to the surge in gas prices but has fully restored production since.

“We need to build a system that is less reliant on Russia and is more green including by using renewable energy for fertilizer production,” Holsether said.

The UN classifies over half a million people in Ethiopia, southern Madagascar, South Sudan and Yemen in the most severe phase of acute food insecurity.

Africa generally features among the most severely hit regions. Yara has donated 18,000 tonnes of fertilizers to Ghana and agreed another 40,000 tonnes of delivery, expecting that with the donated part the average price will come down.

— Reporting for Reuters by Dmitry Zhdannikov.

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Fertilizer costs have soared due to rising demand and lower supply as record natural gas and coal prices triggered output cuts in the energy-intensive fertilizer sector. Russia is a major potash producer and exporter of natural gas, a key input in producing nitrogen fertilizer.

Still, Vilsack said it was too early to tell what the impact of the Russia-Ukraine crisis would be on U.S. farmers.

“It will take some time for impact to be felt. I hope that no company out there, whether it’s fertilizer or any other supply that may be impacted by this, will take unfair advantage of this circumstance or situation,” Vilsack said at a news conference. “That’s my biggest and deepest concern.”

Vilsack’s comments came a day after Iowa’s state Attorney General Tom Miller said he is seeking explanations for higher prices from top fertilizer producers, including Mosaic Co., Nutrien, CF Industries, Koch Industries and OCI N.V.

Iowa is the top U.S. corn producing state, and U.S. farmers are expected to scale back corn plantings this year in favour of crops that require less fertilizer such as soy.

Since January 2021, anhydrous ammonia prices have increased 315 per cent, Miller said, citing USDA data. Urea prices have increased by 214 per cent, while liquid nitrogen is up by 290 per cent and potash by 213 per cent.

Miller said his office is talking with other states about soaring prices.

“Data suggest that manufacturers are taking advantage of higher farm incomes to increase their returns, but we need more information,” he said.

— Reporting for Reuters by Leah Douglas in Washington and Tom Polansek in Chicago.

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The company cut back ammonia production at a number of sites in Europe from September through November following a jump in the price of the natural gas used in the manufacturing process, hitting its overall output in the region by 30 per cent.

Fertilizer prices have risen sharply this year, tracking higher energy costs, putting key crops at risk and adding to global food security and inflation fears, analysts say.

“The price of finished nitrogen fertilizer has risen in the quarter to a level where it has been profitable for us to start up production and, in addition, the global ammonia price has also risen,” a Yara spokesperson said.

The company said in a statement that while it aimed to keep supplying customers, it couldn’t rule out cutting back ammonia production again if necessary.

Rivals including CF Industries have also cut production.

Including maintenance and unscheduled outages, Yara’s European ammonia production was approximately 370,000 tonnes below capacity during the curtailments.

“The impact on finished fertilizer production has been limited, as unprofitable ammonia production has been replaced with sourcing from Yara plants outside Europe, and from Yara’s global ammonia trade and shipping network,” the company said.

CEO Svein Tore Holsether told Reuters last month that some capacity at Yara’s Dutch plants had already been brought back on stream.

European wholesale gas prices have surged as much as 700 per cent this year as demand recovered rapidly from a pandemic slump at a time of low storage levels and supply constraints.

As of Tuesday, the European benchmark was 570 per cent higher than at the start of 2021.

As a result of supply constraints, farmers in Europe have scrambled to buy urea and liquid nitrogen at elevated prices for fear of running short in the planting season.

Yara has the capacity to produce 8.5 million tonnes of ammonia per year worldwide, with 4.9 million tonnes of that coming from Europe.

Ammonia is an ingredient in finished products used to fertilize crops but also goes into explosives and for cleaning exhaust from diesel engines, among other applications.

— Reporting for Reuters by Victoria Klesty and Nora Buli; additional reporting by Terje Solsvik.

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The chain, a joint venture between Federated Co-operatives and the Blair’s Family of Companies, announced Monday it will sell its site at Lipton, Sask., about 80 km west of Melville, to ag retailer ProSoils Inc. for an undisclosed sum.

The sale to ProSoils also includes Blair’s anhydrous ammonia facilities at Lipton and nearby Balcarres.

The divestitures were a requirement for the approval of the federal Competition Bureau after Blair’s and FCL announced their joint venture earlier this year.

ProSoils — an independent family-owned retailer dealing in fertilizer, crop inputs and seed at Rose Valley, about 75 km south of Tisdale — operates the Lipton site effective immediately and expects the sale to close by the end of January at the latest.

The Blair’s Crop Solutions joint venture is now down to six outlets providing retail crop inputs, feed products and agronomic services at Lanigan, Liberty, McLean, Nokomis, Rosthern and Watrous.

The Competition Bureau had said in July that without the conditions placed on the deal, the Blair’s/FCL joint venture would “likely substantially lessen competition” in retail inputs in the rural municipalities of Cupar, Kellross, Lipton and North Qu’Appelle.

The bureau noted Melville-based Prairie Co-op, a member of the FCL group of co-operatives, also operates ag retail centres in the area and other retailers in the area are not “vigorous competitors” to either Prairie Co-op or Blair’s.

The consent agreement between Blair’s and the Competition Bureau also means any local-level co-ops affiliated with FCL are ineligible to buy any of the affected Lipton assets anytime in the next 10 years, Blair’s said Monday.

The Lipton site had been an “integral part” of the Blair’s ag retail business for over 10 years, Blair’s CEO Kevin Blair said in a release Monday.

Blair’s managers have been operating the Lipton business at arm’s-length from the joint venture’s six other Saskatchewan sites until a buyer could be found.

“While the divestiture process has been challenging to our customers and staff at Lipton, we are pleased to work with ProSoils on transitioning the ag retail operations at Lipton to a progressive and independent family-owned business,” Blair said.

Staff at the Lipton site will be offered positions with ProSoils and will be reaching out to customers and suppliers with more information, the companies said.

Farmers “can be assured that all Blair’s customer commitments for products and services will transition seamlessly to ProSoils,” FCL said in a separate release Tuesday. — Glacier FarmMedia Network

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But while urea and urea ammonium nitrate (UAN) now dominate, some growers and input suppliers still see enough value in anhydrous to maintain a degree of availability. 

Why it matters: Anhydrous, the comparatively cost-effective option for nitrogen fertility, is increasingly hard to source from ag-input suppliers, though not without reason. 

In the southwest, AGRIS Cooperative Ltd. still delivers anhydrous through four service locations. 

“Industrial uses are the biggest market for anhydrous. It’s a secondary thing for agriculture, though more significant out west,” says Dale Cowan, senior agronomist and sales manager for the supplier.

“It’s a pretty static volume. Definitely not a growth area. It tends to be the same farmers using it.”

The cost-effectiveness of anhydrous is one reason some growers still find it an attractive option. With a 20- to 25-cent difference, Cowan says it can save $35 or $40 per acre. Indeed, anhydrous is the most cost-effective option dollar for dollar. But applicators do have to be trained, and they need to take additional safety precautions during application.

There are also environmental and flexibility considerations. 

“As we try to minimize loss, urea has been the most popular. UAN lends itself to many different applications and timings,” says Cowan. 

“We’re starting to see these other value-added products. It’s very hard to [do] anything else for anhydrous. It tends not to be something we spend a lot of time enhancing.”

Stringent safety regulations 

Keeping anhydrous available to growers requires extra work on the part of input suppliers and regulations continue to increase. 

Mandatory fencing around yard sites that contain the product is the most recent change, though inspection and federal accreditation for tanks and running gear is also required in addition to training by farmers and retail personnel. 

Anhydrous stocks must also be reported to local municipalities, and all sites and equipment are subject to regular inspection and audit. 

Part of the requirement for additional site security came from theft concerns, specifically because anhydrous can — and allegedly has been — used in the production of illicit methamphetamine. 

“I haven’t heard of anyone here experiencing that, but that’s not to say it doesn’t happen,” says Cowan. 

Opting out

Hensall Co-op has not experienced any theft either but increasingly stringent regulations did play a role in the cooperative’s move to stop offering anhydrous after 2019. 

Lower customer demand was an even more significant factor, however. 

“Significant resources went into training and regulations each season,” says Jim Barclay, Hensall’s crop retail manager. “Number one was less demand from customers meant significantly less tonnage going through fixed cost of assets.” 

In its place, Barclay said trends lean toward liquid fertilizer such as 28 UAN, urea and a Nutrien Ltd. product called controlled release ESN Smart Nitrogen. There are also split application strategies like Y-drop, side-dressing and high-clearance dry fertilizer. 

In terms of overall popularity, Barclay says there is no clear winner.

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New Transport Canada regulations came into force Jan. 12, which affect the frequency of hydrostatic testing and visual inspection of ammonia nurse and applicator tanks and field delivery units.

The concern is whether enough of the tanks can be recertified in time for the growing season, although CAAR says that many agri-retailers have already done the testing to bring nurse tanks into compliance for spring planting.

Why it matters: Anhydrous ammonia is a popular nitrogen fertilizer source for crops grown across Canada. Any delay in access to anhydrous ammonia would have a significant effect on being able to get crops planted or seeded.

“CAAR and Fert Canada both have working committees, and we are also communicating and continue to work with Transport Canada to find what is the right solution to limit inconvenience to farmers from these changes,” said Mitch Rezansoff, executive director of CAAR.

“The discussions are going well, but not as fast as everyone would like,” he said. A change in nitrogen source away from anhydrous ammonia to granular or liquid fertilizer would be impossible for many farmers, as the inventory is not there at the retailer level and neither are the equipment or logistics to manage such a significant change in the type of nitrogen fertilizer used across the country.

Transport Canada confirmed to Farmtario on Monday that no decision has been made on mitigating the regulatory changes on anhydrous ammonia tanks.

The regulations have been in development since 2014, were finalized in the summer of 2017 and came into effect Jan. 12, 2018. The regulatory changes are part of a larger review of regulations of compressed gas storage tanks.

Here’s what the regulations mean to farmers and retailers:

• The previous standard was pressure testing every five years
• Tanks that were heat treated after welding can continue to be tested every five years
• Tanks that were not heat treated after welding now have to be tested every three years, which is causing the most consternation. Retailers that had the tanks tested in 2013 or 2014 will now have to retest those tanks. However, some of them are already filled and needed for use soon
• CAAR and Fertilizer Canada are trying to get Transport Canada to suspend the need for testing of those non-heat-treated tanks until after this year’s fertilizer application. That will mean more work this summer, but would not affect the fertilizing of this year’s crop
• Tanks now also have to be visually inspected yearly by a certified inspector, often an employee of a retailer

Transport Canada is now looking at potential changes to how compressed gas container are constructed. Rezansoff said CAAR and manufacturers are part of that process.

— John Greig is the editor of Farmtario at Ailsa Craig, Ont. Follow him at @jgreig on Twitter.

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The federal Competition Bureau on Monday announced it has an agreement with CPS over its planned deal to buy six crop input retail outlets from Wendland Ag Services, based at Waldheim, Sask., about 50 km north of Saskatoon.

In its review, the bureau said, it found the proposed deal “would likely lead to a substantial lessening or prevention of competition in the retail supply of anhydrous ammonia and urea to farmers in certain areas of Saskatchewan.”

The Wendland business, which began as a fuel dealership in 1955 and expanded into crop inputs in the late 1960s, today includes outlets at Rosthern, Domremy, Blaine Lake, Delmas, Saskatoon and Cut Knife.

CPS’ consent agreement with the bureau calls for the company to divest a retail outlet at Rosthern, about 25 km east of Waldheim.

The agreement also calls for CPS to sell a pair of its anhydrous ammonia storage tanks — one at Leask, about 60 km north of Waldheim, and one at Hoey, about 35 km south of Prince Albert.

Given the “importance of providing additional product offerings beyond anhydrous ammonia to compete effectively,” the bureau said it will also have to assess whether would-be buyers of the tanks have “effective complementary retail facilities nearby.”

“The merging parties’ continued co-operation throughout the process was instrumental in reaching a timely consent agreement that will ensure that Saskatchewan growers have access to competitive prices and product choices,” John Pecman, the federal commissioner of competition, said in the bureau’s release. — AGCanada.com Network

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The province’s environment department said about 9,800 litres of liquid urea ammonium nitrate were “accidentally released” Wednesday from a container on private land in Vulcan County, northeast of Carmangay, about 60 km north of Lethbridge.

“Some quantity” of the spill is now believed to have entered the Little Bow River, given “observed fish kills in the vicinity of the spill,” the province said.

Sampling so far on the river at the spill site and downstream confirm levels of nitrate and ammonia “harmful” for fish, but otherwise “far within provincial and federal health guidelines.”

No pollutants have so far been detected further than three km from the spill site, officials said.

However, “until we know more about the behaviour of the spill in the Little Bow River all water users along (the) river are urged to close intake until further notice,” the province said Friday evening.

Once more sample results have been assessed, the province said, “we will advise users of the results and issue further instructions.” — AGCanada.com Network

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“The supply seems to be all right; definitely anhydrous ammonia is available,” he said.

However, he’s heard some reports that this year’s phosphate is too “thin” but he thinks that could be related to storage issues.

“When you need it, it’s really too late to worry about quality issues; that adds for a bit of extra stress,” he said.

The real issue that’s flabbergasted him so far this year is how badly local roads have been beat up from spring trucks delivering fertilizer to farms.

“We have frost boils all over the place from trucks trying to deliver spring fertilizer; I can’t get over the damage it does,” he said.

Getting fertilizer doesn’t appear to be a problem right now, but damage to roads has him and others thinking more about long-term storage solutions.

“A lot of guys are rethinking the spring application of fertilizer; maybe the fall application of fertilizer isn’t such a bad deal,” he said.

As for storing fertilizer off-farm, Mazier said there are challenges with that as well.

“Some dealers will actually charge you for storage if you don’t use it all. Anhydrous is tricky; guys usually buy it up early,” said Mazier.

As far as prices go, nitrogen fertilizer (82-0-0) is around $1,000 a tonne right now — about $250 higher than in the fall, according to Mazier. Urea is around $650 a tonne, but producers should have pre-booked by now to ensure delivery.

A few months ago, there were rumours about a looming shortage of ammonia sulphate, the prime fertilizer used by canola growers. It appears there will be enough after all, Mazier said.

“I think the phosphate is pretty well in position and urea is in position,” he said.

In the U.S., there has been a massive run on fertilizer recently with the surge in corn planting over the past 10 days, according to David Asbridge, president and senior economist with NPK Fertilizer Advisory Service in Missouri.

“There’s a spot shortages of fertilizer, particularly phosphate, in the eastern Corn Belt,” he said. “Dealers were hesitant to order replacement tonnes because it had been so wet and so late over there; they were concerned they weren’t going to have much of a season.”

However, he said, the run on supplies in the eastern U.S. is far enough away for Canadian farmers to be relatively unaffected.

— Dave Sims writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.

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The reduction in usage should hit corn plantings more than other crops, since nitrogen is the key booster of corn yields.

“What we’re seeing this season is a reduction in rates,” said Ray Carpenter, senior vice-president of agronomy for Farmers Cooperative in Ames, Iowa, referring to nitrogen bookings. “Reduced rates mean reduced yield.”

Fertilizer’s base feedstock, natural gas, is around $2.716 per million BTU, down from $4.536 last year (all figures US$). The price of anhydrous ammonia fertilizer remains high — around $650-$700/ton.

The disparity between the steep cost of fertilizer and the lower cost of natural gas is because fertilizer inventories remain thin due to 2014 shipping backlogs and because the industry is controlled by a few big players.

“The reality is input costs don’t come down as fast as the break-even price,” said analyst Sterling Liddell of Rabobank.

Crops require nitrogen, potassium and phosphorus, with corn the single biggest user of nutrients. It takes roughly one pound of nitrogen per acre to yield one 25-kg bushel of corn.

Crop specialization has made corn acres, planted year after year, increasingly dependent on nitrogen.

“I don’t want to overspend,” said Iowa farmer Mark Recker, who will begin fieldwork soon. “I’m debating how much side dressing I want to do, splitting applications. I may back off compared to previous years.”

Recker, an Iowa Corn Growers director, added: “When you had $6 corn, it drove me to put on a little higher nitrogen to get higher yields. Now you look at it much more economically.”

The U.S. Agriculture Department projects farm gate prices for corn this season at $3.50-$3.90 a bushel, versus $6.89 two years ago. Soybeans are projected at $9.45-$10.95, versus $14.40 in 2013.

Liddell said if farmers plant one million to two million fewer corn acres this spring, anhydrous ammonia could fall $50-$100 a ton.

Some analysts are more bearish.

“The cost of gas and ammonia right now is around $100 a ton. They’re selling it in Midwest for $600 a ton,” said one fertilizer industry source.

“So there’s a lot of room for prices to come down. You could see a 40-50 percent drop by the end of the year.”

— Christine Stebbins is a Reuters correspondent covering grain and oilseed markets from Chicago.

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