Anhydrous prices have farmers hopping mad

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Our series on fertilizer prices is, as we say, •resonating in the countryside.' People are reading it and getting a bit torqued off.

Some farmers, responding to reports of high prices and shortages of anhydrous ammonia, call it •blatant gouging.' Some refer to suppliers as •blackmailers and thieves.•bCrLf

Who is getting rich here, the dealers or the manufacturers? In my last blog, reader reaction was mixed. My guess is it's the manufacturer. Just look at some of the price quotes and financial reports listed on their websites. Start with this link, from google's financial data. If you check historical prices for companies like CF Industries, you'll see stock prices are up at least 20% in the last year or so. Then check historic prices for related companies at the bottom of that google link, for companies like Terra Industries, The Mosaic Co., Agrium and Potash Corp.

Terra's revenues for the 2007 third quarter totaled $594 million compared to $465 million for the 2006 third quarter. The $129 million revenue increase from the prior year was mostly due to higher nitrogen selling prices. Ammonia, nitrogen solutions (UAN) and ammonium nitrate (AN) selling prices improved 8, 61 and 11 percent, respectively, over the same period of last year.

Meanwhile Merrill Lynch has upgraded its view of the fertilizer industry, based on higher fertilizer prices. Check that story here.

Not just fertilizer. One farmer told me his brother wanted to buy crop oil and generic glyphosate. Crop oil went from $5 to $8/gal, a whopping 60% increase.  And glyphosate went from $11.50/gal to $19.50/gal, a 70% increase. 

The same farmer told me he booked and paid $680/ton for spring ammonia. I told him that will probably start looking like a bargain in a few months. 

Still, he's not happy.

"Last year farmers were given the challenge to produce a record crop of corn to satisfy the demand that was coming and we collectively responded by doing what was needed,•bCrLf he told me.  "I certainly do not see that effort coming from the fertilizer industry, including the local supplier.  Even more curious, we were told the same stories last year about potential shortages of fertilizer, yet when tires met the dirt, we could get what we needed and there were no shortages...  AMAZING!•bCrLf 

Are fertilizer and other input suppliers setting themselves up for a huge letdown when their customer base decides to plant 8 million fewer acres of corn? What will happen to that ammonia priced at $800 per ton?

Most farmers will be unsympathetic.  "I will be there and laugh at their agony and dismay,•bCrLf said the farmer mentioned above. "This unfolding, unabashed highway robbery is the epitome of farming the farmer. There is no voice to represent our issue and no way to defend it.•bCrLf

But there is a voice— at least, in my opinion. Where are the commodity organizations? Where is the American Farm Bureau Federation? Isn't it their role to voice farmer concerns in a situation like this?

"Farmers held their end of the bargain when we were challenged with producing a needed product and in the end we are being punished for responding to that challenge,•bCrLf said my farmer friend. "What a sad statement for those who supply the ag industry.•bCrLf

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