AXcess News: Fertilizer Shortages Loom, Fueled by Skyrocketing Grain Prices

HOUSTON, TX , this year looks to be a boon for their company. Earlier this week Itronics reported its fourth quarter and year end results, which reflected a 25% increase year-over-year. Now the company says it's ready to meet demand after doubling the capacity of its plant last year. "Much of each year's sales have been repeat business, which is very positive," said Dr. John Whitney, Itronics President.

Now, U.S. distributors of anhydrous ammonia, potash and phosphates, which make up the bulk of fertilizer sold in the U.S., are experiencing unprecedented global demand and in the case of potash, limited availability in the United States has caused rationing to occur.

A source inside a major U.S. distributor of fertilizer told AXcess News Thursday morning that prices of some fertilizers have doubled in the last two weeks and orders for spring planting will push prices even higher.

Wednesday the Nebraska Farmer, a major agricultural publication, reported that "Nitrogen and phosphorus fertilizer prices are expected to keep climbing in 2008."

The Ag publication quoted University of Nebraska-Lincoln soils specialist Gary Hebert, who says, "With fertilizer being a worldwide commodity, the U.S. must compete with other buyers."

Hebert notes that natural gas accounts for 80 to 90% of the cost of producing anhydrous ammonia, the base material for producing all other nitrogen fertilizers. But while base prices in the U.S. were $7, in other countries, like Russia, costs are as low as $2 and worldwide, demand for nitrogen fertilizers has risen 14%.

The Fertilizer Institute noted that world demand and ethanol production are among several factors contributing to the increasing fertilizer prices.

A January 31, 2008 report by The Market, a UK-based newsletter on fertilizer business, says that ammonia prices are rising and from Jan. 24th to the 31st, in Tampa, prices have gone up 10 percent in one week alone. Again, global demand is cited.

Ohio Corn Growers Association (OCGA) board members recently met with representatives from The Fertilizer Institute (TFI), seeking answers to high fertilizer prices.

"The fertilizer cost and supply issues are a major concern for our members," said OCGA President Mark Drewes. "Some growers sometimes can't get the supply they need, while growers have watched prices go up dramatically."

USDA figures show that from January 2000 to December 2007, fertilizer prices are up 116 percent. "Rising natural gas prices are one key factor in fertilizer costs," said TFI Vice President of Economic Services Harry Vroomen.

While the nation's farming community faces a boom in commodity prices on the farm for corn (+$5 bushel), wheat (+$9 bushel) and soybeans (+$13 bushel), planting it this spring is going to be another matter. But with only a handful of alternative resources available, agricultural advocates are pushing for legislation to protect and assure plentiful supplies, though critics argue it won't come soon enough. Enter Itronics' GOLD'n GRO liquid fertilizers.

Itronics manufactures its environmentally friendly mix of liquid fertilizers from recycled photochemicals, which at first blush you might think is too limited in availability to fill demand. But as Dr. Whitney said in the Company's Feb. 5, 2008 announcement, "much of our sales is repeat business."

Whitney noted that this year, Itronics expects more farmers to be ordering its liquid fertilizer because of how well it works in drip irrigation applications. In California, Itronics' largest market, many farmers are squeezed by high costs of irrigation while the Company's line of fertilizers has been engineered to work well in those types of applications, says Whitney.

Whitney would not give a forecast on sales growth for Itronics' GOLD'n GRO line of liquid fertilizers, but he did say that because of demand, this year may see further "meaningful growth in revenues."

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