How is the Fertilizer Shortage Impacting the Agriculture Industry?

How is the Fertilizer Shortage Impacting the Agriculture Industry?

Due to the COVID-19 pandemic, global supply chains are in complete disarray – this isn’t news to anyone. In fact, we’ve covered various supply chain issues in recent blog posts, including the increased demand for raw materials, the rising market and demand for resin, and unparalleled lead times across many industries.

Unlike these issues, the ongoing fertilizer shortage doesn’t directly relate to COVID-19. Instead, many different factors have contributed to the fertilizer shortage. Let’s explore those factors, and the impact the fertilizer shortage continues to have on the agriculture industry.

 

Factors Contributing to the Fertilizer Shortage

Fertilizer is any material, either of natural or synthetic origin, that is applied to soil or plants to supply nutrients essential to the growing processes, including nitrogen, phosphorous and potassium. Fertilizer plays a critical role in the agriculture industry by enabling large scale growing operations and optimizing crop yields.

Unfortunately, fertilizer is currently in short supply, especially fertilizers of the synthetic variety. The shortage results from the cold snap that hit the southern part of the country at the beginning of 2021. Cold weather across the south put a massive strain the available supply of natural gas, a critical component involved in the creation of two widely used synthetic fertilizers – ammonia and urea.

The natural gas shortage shut down or slowed down production at a number of synthetic fertilizer manufacturing plants, leading to the short supply.

 

The Far-Reaching Impact of the Fertilizer Shortage

The fertilizer shortage has had far-reaching impact on the agriculture industry across the United States, and even globally. Without ready access to crucial fertilizer, many agriculture businesses have encountered:

  • Price increases: In a classic case of supply and demand, the shortage has led to an increase in fertilizer prices. These increases continue to squeeze margins for farmers across the globe.
  • Supply rationing: Many fertilizer vendors have begun to ration their available supply because they can’t meet demand. This practice can make it even more difficult for farmers to find the fertilizer they need at a reasonable price.
  • Delayed planting: Farmers have short windows for applying fertilizer. Without access to the necessary fertilizer supply, many farms have been forced to delay planting cycles or adjust their fertilizer schedules.
  • Reduced yield: Fertilizer helps to improve crop growth. The lack of fertilizer has led to a reduction in crop yield across many farms.

The impact of the fertilizer shortage has been felt outside of the agriculture industry as the increased operational expenses and reduced supply of crops has resulted in increased prices for produce.

 

Strategies for Reducing the Impact on Your Business

Much like when dealing with the longer lead times for FIBC bulk bags, there are steps businesses within the agriculture industry can take to limit the impact of the fertilizer shortage.

Be sure to plan ahead and order fertilizer well in advance to allow for longer lead times. Explore alternative sources, like other vendors or a different type of fertilizer. Finally, maintain awareness of the situation – hopefully the end of the fertilizer shortage is in sight.

 


 

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July 07, 2021

Categories: Produce Packaging

About the Author: Alec Dicken

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