U.S. farmers face supply shortages, higher costs after Hurricane Ida

Bayer's glyphosate manufacturing plant in Louisiana remains shut after Hurricane Ida slammed the Gulf Coast

  

CHICAGO- Troy Walker's phone will not stop ringing at his Kansas farm cooperative, with growers needing fertilizer for their wheat fields in the coming months.

In Kentucky, corn and soybean farmer Caleb Ragland said shelves at his local farm supplier are often bare of weed killer glyphosate and other crop chemicals. He expects the situation could get worse.

Bayer's glyphosate manufacturing plant in Louisiana remains shut after Hurricane Ida slammed the Gulf Coast in late August, further complicating logistical and supply chain problems that had already tightened global supplies of fertilizers and chemicals.

"Ida was like a heavyweight boxer going 15 rounds, and threw a hard upper-cut at the farmer," said Ragland, a ninth generation corn and soybean farmer in Magnolia, Kentucky. "Things were already bad. Ida made it worse."

Ida disrupted grain and soybean shipments from the Gulf Coast, which accounts for about 60% of U.S. exports, at a time global crop supplies are tight and demand from China is strong.

Now, the storm's ripple effects are hampering production and movement of some fertilizers and crop chemicals ahead of U.S. harvest. This is straining an agricultural and food supply chain already battered by trade and logistics delays during the pandemic.

Rising input costs threaten the incomes of farmers who had banked on booming profits this year, as crop prices soared to the highest in nearly a decade, after years of stagnating around break-even levels. Ragland and other farmers have been rethinking what they will plant in the spring; crops requiring less fertilizer look more attractive.

"At the current prices for nitrogen, it's making me take a hard look at my corn acres," Ragland said. "It makes me think we might grow soybeans on some of those acres."

Before Hurricane Ida, the U.S. Agriculture Department had estimated that farmers would face a 2.2% increase in all corn input expenses for every acre planted in 2022, according to the most recent data, as chemicals and fertilizers followed higher crop prices and supply chain disruptions.

Global supplies were thin of the raw ingredients needed to make farm herbicides including glufosinate, atrazine and glyphosate, partly due to pandemic-related labor and shipping issues, said Marc-Andre Fortin, director of North American crop protection with Farmers Business Network, an online marketplace for farmers.

Imports of glyphosate containers shipped into the Port of New Orleans were down 71% from the same period a year earlier and herbicide container imports were down 1.2%, according to Panjiva, the supply chain research unit of S&P Global Market Intelligence. Potash imports into New Orleans dropped 14.8%.

Then, Ida hit and shuttered Bayer's glyphosate plant in Luling, Louisiana. The plant helps provide all the active ingredient for Bayer's Roundup branded ag herbicides in the United States, the company told Reuters.

Bayer's plant has been closed since Aug. 28. The company, which hopes to restore power within weeks, said it is also working to repair wind damage and run system tests.

RATIONING SUPPLIES

Global glyphosate supplies were already tight as flooding, COVID-19 outbreaks and congested ports snarled production and exports in China for months, said Allan W. Gray, executive director of the Purdue University Center for Food and Agricultural Business.

As a result, chemical manufacturers are rationing supplies to farmers and others, Gray said.

Fertilizer is problematic, too. Walker and the staff at Kansas farm cooperative MKC have not been able to get price quotes from fertilizer suppliers for early 2022. Suppliers do not know if they will have anything to sell, he said - so Walker has turned away some customers.

Such problems have plagued retailers for months. China, the world's top exporter of phosphate, temporarily halted urea and diammonium phosphate fertilizer exports this summer to feed domestic demand as energy costs and corn prices rose.

More recently, fertilizer producer CF Industries Holdings Inc halted operations at two United Kingdom manufacturing complexes, citing high costs for natural gas feedstock, a key raw material used in nitrogen fertilizers. 

Canada's largest potash producer Nutrien Ltd is sold out in North America through at least the third quarter, and global stocks for potash are tight for the rest of the year, said Ken Seitz, executive vice president of potash at Nutrien Ltd.

Ida tightened fertilizer supplies further, when CF Industries and Incitec Pivot Ltd shut plants because of the hurricane and declared force majeure for customers. 

As the supply chain snarled, prices spiked. Prior to the storm, a New Orleans barge of urea set to ship in September to destinations across the U.S. or Canada traded at $450 a ton, said Josh Linville, director of fertilizer at StoneX Group Inc. After, the price jumped to $552 a ton.

"In the fertilizer world, anything that can go wrong, will go wrong," Linville said. "It's death by a thousand cuts."

Wheat and cotton farmer Keeff Felty, 54, said the situation is spiraling. He is studying soil samples to see where he can cut back on fertilizer next season, and paid a company to haul some in-state after local suppliers could not fill his order.

"The price went up from Monday to Wednesday," said Felty, "and by that night, they were out."

P.J. Huffstutter and Mark Weinraub

(Additional reporting by Rod Nickel in Winnipeg, Manitoba; Editing by Caroline Staufer and David Gregorio) ((pj.huffstutter@thomsonreuters.com; 313-484-5275 (w); On Twitter @pjhuffstutter; Reuters Messaging: pj.huffstutter.reuters.com@thomsonreuters.net))