AMES — An Iowa State University study finds there’s not enough evidence to show fertilizer companies are taking advantage of inflation to raise prices. The study was requested by Iowa Attorney General Tom Miller earlier this year because of fertilizer price spikes.
ISU ag economist Chad Hart, one of the study’s authors, says several factors caused fertilizer prices to rise, including supply chain problems, energy market fluctuations and Russia’s invasion of Ukraine. Hart says, “There were so many other things going on that you really can’t disentangle what is truly supply and demand and fundamental factors impacting the fertilizer market versus what one would consider price manipulation.”
The price of ammonia is up 126% compared to a year ago. Farmers use nitrogen, phosphate and potassium-based fertilizers to help their plants grow. Hart says there was a “perfect storm” of factors but there’s not enough evidence to say whether fertilizer companies are using their market power to hike prices. Hart says, “Unless there’s truly unusual price movement within the fertilizer market versus what we’re seeing everywhere else, you’re not likely to get that answer to the question.”
The ISU study predicts fertilizer prices will decline in the second half of this year but they won’t return to where they were in mid-2020 because farmer demand is high and supply chain problems still exist.