Fertilizer logistics strained with record pace planting
"When the farmer wants to go that fast, which is becoming increasingly more routine, the system has a very difficult time keeping up with it," said Brian Schouvieller, senior vice president of agriculture business for CHS.
His company is among those, including Agrium Inc and Koch Industries Inc, that are planning to build or expand more than three dozen fertilizer plants and storage facilities across the United States. The trend is fueled both by demand for closer proximity to farms as well as cheap prices for natural gas, which is the main feedstock for ammonia nitrogen fertilizer.
But the solution won't be quick. The $1.4 billion nitrogen manufacturing plant in North Dakota that CHS is building, its first, is set to start up in 2016.
Agrium, the biggest U.S. farm retailer of crop inputs, last week stepped back from two projects that would have expanded its capacity to make nitrogen-based fertilizer, partly because competitors are pursuing similar plans.
The company did not respond to a request for comment on the logistical shortfalls.
No More Nitrogen
The strains emerged as U.S. farmers set out to plant 97.3 million acres of corn, the most since 1936 and nearly a quarter more than a decade ago, according to USDA.
In North Dakota, agricultural supplier Alton Agronomy temporarily ran out of nitrogen as planting conditions improved in mid-May, said Robin Stene, general manager of Halstad Elevator Company. Halstad is part of a group of cooperatives that own Alton Agronomy.
"When everything is going to happen in 10 days, logistically there's going to be shortages around," Stene said, referring to the fast pace of planting.
Farmers were left with a vexing choice: plow ahead and risk a diminished yield or await new supplies and push crop development deeper into the hotter, more hazardous summer months.
In Minnesota, Salol Elevators temporarily ran out of urea, causing corn farmers to "actually shut their operations down waiting for fertilizer," Andy Pulk, a farmer who sits on the elevator's board, said.
He said he postponed planting fields of canola due to the shortage and never sowed about 30 percent of the acres he had intended.
Corn yields get a boost if farmers apply nitrogen at planting time because the fertilizer helps kick off the growing process, North Dakota State University agronomist Joel Ransom said.
He said the biggest threat to yields so far has been planting beyond the optimal date, which differs by state - in North Dakota, for instance, it was May 1. On average, agronomists estimate that yields drop about a bushel per day for each day's delay.
Farmers have a month-long window to apply nutrients after planting without seriously hurting yields. Crops suffer stress if they grow too long without it.
"There definitely was a lack of capacity to meet the needs on some of those busy days," Ransom said.
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