Grain prices have skyrocketed since Biden’s election, but so have farm input costs, including fertilizer prices inflated by tariffs — the South Dakota Standard

A quick scan of the farm futures markets will confirm that farmers are seeing some sizeable gains in the prices they are getting for their produce. Double digit profits in Corn and soybeans, crops that were collectively worth nearly $7 billion to South Dakota farmers in 2021 are the state’s largest source of income for agriculture. Adding to that number is nearly another billion dollars worth of wheat and other crops grown on the 43 million acres dedicated to crop production in South Dakota.

Normally, such price jumps are worth celebrating because they are very good for our producers and our state – but enthusiasm for this particular rally is muted, and with good reason. Like everything else in our inflationary economy, the prices farmers pay for their inputs have risen at about the same rate as the prices they receive for their outputs, ie crops.

For most of these inputs, inflation alone is probably responsible for many of the cost increases experienced by farmers, but one of these falls into a unique category that affects international trade regulations and can be addressed at a geopolitical/economic level.

That particular input would be fertilizer and its rapidly increasing cost, accounting for between 20% and 35% of farm operating costs in this country. With wheat and corn production requiring enough fertilizer to stay in the high 35% range, you can see why South Dakota farmers are feeling the brunt of price increases.

Because the world’s dependence on agricultural commodities was so badly affected by Russia’s invasion of Ukraine, fertilizer production was severely affected by Russia’s determined strike at its neighbor. almost 30% of global fertilizer exports come from this region. The result? Fertilizer costs went out $270/ton in 2021 to $1400/ton this year.

No doubt many are wondering if we couldn’t just get by without fertilizers, which is probably a pertinent question as the world ponders ways to advance technologically in sustainable environments. The answer seems to be, maybe someday. At the moment, we have to infuse agricultural land with fertilizers containing nitrogen, phosphorus, potassium and calcium. The soils are depleted of these nutrients after years of intensive farming. As you might expect, researchers are working hard to find ways to grow crops commercially without the use of fertilizers.

AgWeb last spring reflected on some developments in fertilizer-free agriculture in an article entitled “A future without fertilizers?” But as promising as they may seem, widespread application of research seems to be years away. For now, we could only feed about half the world’s population without fertilizer, at least according to claims made to CNBC by the International Fertilizer Association.

For now, reducing the cost of this product should be a priority. Fertilizer prices have been inflated by the war in Ukraine, so anti-inflation measures are needed agricultural groups have addressed, most notably by asking the Biden administration to drop tariffs on imported fertilizers.

South Dakota farmers are probably in tune with their counterparts in the rest of the country when it comes to seeking some relief on this front. South Dakota’s elected leadership should lead the charge on this issue, which I recall wasn’t a high priority in the recent election. The Federal Trade Commission’s rejection of some tariffs on fertilizers from Russia, Trinidad and Tobago last July was a start, but efforts must go further.

I haven’t been able to find a list of tariffs (help me readers if you can), but a Des Moines Register story on the subject notes that the US imports fertilizers from Russia, China, Canada, among others and Morocco import and that some of these imports are subject to customs duties. The FTC’s rejection of some tariffs last July was well received, but farm groups want more done to get rid of them, including some that are likely holdovers from Donald Trump’s notoriously counterproductive “tariff wars.”

Despite high prices in global agricultural commodity markets, our farmers are financially strapped by conditions that can be alleviated, at least in part, by reducing – or better yet, eliminating – tariffs on fertilizer imports.

John Tsitrian is a Black Hills businessman and writer. He was a weekly columnist for the Rapid City Journal for twenty years. His articles and op-eds have also appeared in The Los Angeles Times, The Denver Post, and The Omaha World-Herald. Tsitrian served in the Marines for three years (1966-69), including a 13-month stint as a radio operator in Vietnam.