Prices may drop slightly in coming months, but growers are expected to be hit this year with a 33 percent increase in fertilizer costs, the report said. The higher nitrogen fertilizer prices are associated with the large price increases in natural gas, which is used in the nitrogen fertilizer manufacturing process. Fertilizer costs are a significant portion of costs for farmers growing forage grasses says Dr. Don Ball, a forage agronomist with the Alabama Cooperative Extension System. Higher fertilizer costs will cut significantly into producers' potential profits. More open land in Alabama is devoted to pasture and hay production than all other agronomic and horticultural crops combined.
Corn is another crop that needs large amounts of nitrogen to produce at profitable levels.
The cost of nitrogen is the largest single variable cost in corn production. No other element produces such large and consistent increases in corn yield. While it does not have the heavy nitrogen demands of forage grasses and corn, cotton, the state's leading row crop in cash receipts, does need adequate fertilization to produce its best yields. Max Runge, an Extension agricultural economist, says nitrogen fertilizers account for about 10 percent of variable costs in Extension's 2001 cotton production budget. But farmers do have a variety of management options that can help them reduce fertilizer costs.