Fertilizer Price Volatility Began in 2002

Fertilizers are important for the nutrients they provide in the production of crops. However, their prices have been more volatile in the last six years than ever before. From 1960 through 2002, both fertilizer 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 at a much faster rate than the prices farmers were paid for their crops. Fertilizer prices also became more volatile over those six years. Fertilizer price increases through 2008 were largely driven by high energy prices and the record costs of natural gas, which is a basic input in producing 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 through 2012, driven by strong domestic demand for plant nutrients due to high crop prices, before declining afterward. Since June of 2017, fertilizer prices and crop prices received have both trended upwards.