Focus: U.S. farmers face supply shortages, higher costs after Hurricane Ida

Bayer Cropscience

22/09/2021 12:00

By P.J. Huffstutter and Mark Weinraub
    CHICAGO, Sept 22 (Reuters) - Troy Walker's phone will not
stop ringing at his Kansas farm cooperative, with growers
needing fertilizer for their wheat fields in the coming months.
    In Kentucky, corn and soybean farmer Caleb Ragland said
shelves at his local farm supplier are often bare of weed killer
glyphosate and other crop chemicals. He expects the situation
could get worse.
    Bayer's glyphosate manufacturing plant in Louisiana remains
shut after Hurricane Ida slammed the Gulf Coast in late August,
further complicating logistical and supply chain problems that
had already tightened global supplies of fertilizers and
chemicals.
    "Ida was like a heavyweight boxer going 15 rounds, and threw
a hard upper-cut at the farmer," said Ragland, a ninth
generation corn and soybean farmer in Magnolia, Kentucky.
"Things were already bad. Ida made it worse."
    Ida disrupted grain and soybean shipments from the Gulf
Coast, which accounts for about 60% of U.S. exports, at a time
global crop supplies are tight and demand from China is strong. 
    Now, the storm's ripple effects are hampering production and
movement of some fertilizers and crop chemicals ahead of U.S.
harvest. This is straining an agricultural and food supply chain
already battered by trade and logistics delays during the
pandemic.
    Rising input costs threaten the incomes of farmers who had
banked on booming profits this year, as crop prices soared to
the highest in nearly a decade, after years of stagnating around
break-even levels. Ragland and other farmers have been
rethinking what they will plant in the spring; crops requiring
less fertilizer look more attractive.
    "At the current prices for nitrogen, it's making me take a
hard look at my corn acres," Ragland said. "It makes me think we
might grow soybeans on some of those acres."
    Before Hurricane Ida, the U.S. Agriculture Department had
estimated that farmers would face a 2.2% increase in all corn
input expenses for every acre planted in 2022, according to the
most recent data, as chemicals and fertilizers followed higher
crop prices and supply chain disruptions.
    Global supplies were thin of the raw ingredients needed to
make farm herbicides including glufosinate, atrazine and
glyphosate, partly due to pandemic-related labor and shipping
issues, said Marc-Andre Fortin, director of North American crop
protection with Farmers Business Network, an online marketplace
for farmers.
    Imports of glyphosate containers shipped into the Port of
New Orleans were down 71% from the same period a year earlier
and herbicide container imports were down 1.2%, according to
Panjiva, the supply chain research unit of S&P Global Market
Intelligence. Potash imports into New Orleans dropped 14.8%.
    Then, Ida hit and shuttered Bayer's glyphosate plant in
Luling, Louisiana. The plant helps provide all the active
ingredient for Bayer's Roundup branded ag herbicides in the
United States, the company told Reuters.
    Bayer's plant has been closed since Aug. 28. The company,
which hopes to restore power within weeks, said it is also
working to repair wind damage and run system tests. 
        
    RATIONING SUPPLIES
    Global glyphosate supplies were already tight as flooding,
COVID-19 outbreaks and congested ports snarled production and
exports in China for months, said Allan W. Gray, executive
director of the Purdue University Center for Food and
Agricultural Business.
    As a result, chemical manufacturers are rationing supplies
to farmers and others, Gray said.
    Fertilizer is problematic, too. Walker and the staff at
Kansas farm cooperative MKC have not been able to get price
quotes from fertilizer suppliers for early 2022. Suppliers do
not know if they will have anything to sell, he said - so Walker
has turned away some customers.
    Such problems have plagued retailers for months. China, the
world's top exporter of phosphate, temporarily halted urea and
diammonium phosphate fertilizer exports this summer to feed
domestic demand as energy costs and corn prices rose.
 urn:newsml:reuters.com:*:nL1N2P602Z
    More recently, fertilizer producer CF Industries Holdings
Inc halted operations at two United Kingdom manufacturing
complexes, citing high costs for natural gas feedstock, a key
raw material used in nitrogen fertilizers.  urn:newsml:reuters.com:*:nL4N2QH3ZU
    Canada's largest potash producer Nutrien Ltd is sold out in
North America through at least the third quarter, and global
stocks for potash are tight for the rest of the year, said Ken
Seitz, executive vice president of potash at Nutrien Ltd.
    Ida tightened fertilizer supplies further, when CF
Industries and Incitec Pivot Ltd shut plants because of the
hurricane and declared force majeure for customers.  urn:newsml:reuters.com:*:nFWN2QB0Y3
 urn:newsml:reuters.com:*:nFWN2QF000
    As the supply chain snarled, prices spiked. Prior to the
storm, a New Orleans barge of urea set to ship in September to
destinations across the U.S. or Canada traded at $450 a ton,
said Josh Linville, director of fertilizer at StoneX Group Inc.
After, the price jumped to $552 a ton.
    "In the fertilizer world, anything that can go wrong, will
go wrong," Linville said. "It's death by a thousand cuts."
    Wheat and cotton farmer Keeff Felty, 54, said the situation
is spiraling. He is studying soil samples to see where he can
cut back on fertilizer next season, and paid a company to haul
some in-state after local suppliers could not fill his order.
    "The price went up from Monday to Wednesday," said Felty,
"and by that night, they were out."

 (Additional reporting by Rod Nickel in Winnipeg, Manitoba;
Editing by Caroline Staufer and David Gregorio)
 ((pj.huffstutter@thomsonreuters.com; 313-484-5275 (w); On
Twitter @pjhuffstutter; Reuters Messaging:
pj.huffstutter.reuters.com@thomsonreuters.net))