Many farmers have recently been asking about increases in the price of some fertilizer and how to plan for the upcoming crop year. The cost of production of many fertilizers has increased significantly in the past months as a result of the sharp increase in natural gas prices. Following is an explanation of the role natural gas plays in the cost of producing fertilizer.
Anhydrous ammonia is the source of nearly all nitrogen fertilizer made in the United States.
According to the U.S. Department of Commerce, 17.34 million short tons of ammonia were produced in calendar year 1999, with 88 percent of this total going to produce fertilizer. According to The Fertilizer Institute s 1999 production cost survey, the production of one ton of ammonia requires an average of 33.5 million metric Btu s of natural gas. Therefore, an estimated 580 trillion Btu s of natural gas were used in 1999 for ammonia manufacturing, consuming about 3 percent of the total U.S. natural gas production. This estimate does not include the natural gas used as a fuel in processing other fertilizer products, and some observers believe the fertilizer industry s total use could represent up to 4 percent of U.S. natural gas production. This increase was unexpected by most observers, particularly insofar as it began after the end of the last winter heating season.