Global Demand, ethanol and natural gas prices are the primary drivers behind high fertilizer prices, says Ford West, president of The Fertilizer Institute (TFI). In fact, they have contributed to the highest fertilizer prices on record.

TFI points out that natural gas accounts for 75 to 90% of the cost of producing a ton of ammonia (the building block for all nitrogen fertilizer). Ammonia production costs have increased 172% since 1999 due to skyrocketing natural gas prices. Twenty-five U.S. fertilizer production plants closed due to these high prices, and the U.S. now relies on imports for half of its nitrogen supplies.

Average fertilizer prices in August were 116% higher than they were in 1990 to 1992, according to USDA. In addition, fuel prices in August were up 161% from the 1990 to 1992 period.

The possible unavailability of potash also has become a concern. In October, Reuters reported that the Potash Corporation of Saskatchewan was suspending new sales due to problems at Silvinit, a major potash producer based in Russia. A sinkhole caused by mine flooding was threatening the railway that Silvinit uses to ship potash. The Potash Corporation of Saskatchewan, the world's largest fertilizer company, said in October that it would honor existing shipping agreements but would not make new sales to North American customers until it learned more about the situation in Russia.

Contributing to the potash situation is growing demand from Asian and Latin American markets and a weakened U.S. dollar, which makes Asian and Latin American markets more attractive to potash manufacturers.

Tighten fertilizer use

Soil fertility experts and ag retailers recommend some actions to take to reduce fertilizer costs.

John Sawyer, extension soil fertility specialist, Iowa State University (ISU), says to use university guidelines for nitrogen (N) application developed for your region. Do not over-apply. Use the Corn N Rate Calculator (extension. agron.iastate.edu/soilfertility/nrate.aspx) to help adjust to rapidly changing N fertilizer and corn grain prices.

Sawyer also recommends accounting for all nitrogen applied in ammoniated phosphate fertilizers, starters, weed and feed, and animal manure. And account for corn in rotation with soybean and forage legumes.

Test your soil for phosphorus (P) and potassium (K), he adds. If soils test high to very high, you can reduce rates and withhold applications until soil tests show P and K have dropped to levels where fertilizer is needed.

The use of yield monitors in the fall can help you better determine where you need to put the most or least fertilizer, suggests Bob Williams of Frontier FS Cooperative, Jefferson, WI. An area where only 50 to 60 bu. of corn/acre were harvested, for example, is going to need less fertilizer than an area with higher yields.

Side-dressing is an efficient use of N, Williams says, but adds there is generally not enough equipment available for side-dressing in a timely manner. If you wait to side-dress and experience a rainy spell, you might be unable to apply any N at all.

The closer to side-dress time N is applied, the more efficient it will be utilized, reports James Camberato, associate professor, soil fertility and plant nutrition, Purdue University. “Instead of adding extra N to early preplant N applications, fertilize later or side-dress at the recommended rate,” he says.

Anhydrous is generally less expensive per pound of N than 28% urea-ammonium nitrate (UAN), so if you have equipment for both, you should use anhydrous, Camberato says. “In most situations, anhydrous will be as good as or better than 28% UAN since N loss from anhydrous is usually less,” he points out.

Camberato also recommends incorporating 28% UAN or urea into the soil whenever possible to reduce the loss of ammonia. “If incorporation is not feasible, band rather than broadcast the fertilizer to reduce ammonia loss,” he says. “This is especially important in no-till cropping systems where ammonia volatilization from urea-containing fertilizers can be as much as 30% with broadcast applications and 10% with banded applications.”

Forward contracts, prepay

Williams says that, with fertilizer and fuel prices and land rents as high as they are, you should take advantage of forward contracts and lock in prices to cover your expenses. If you plan to prepay to help save on crop input costs, Williams recommends prepaying for fertilizer first, followed by seed and then crop protection products.

If you did not already make fall applications, you should lock in your spring supply, says Tom Warner, president, Crop Production Services (CPS), Galesburg, IL.

There was not much evidence that growers cut back on fertilizer rates this fall, Warner says, adding that most know from experience that high yields require sound fertility. “Growers with high P and K needs could cut back this year, but they know they are mining their soils and will have to catch up later if they want to continue improving yields,” he notes.

You can cut back a bit on P and K, especially if you use a starter fertilizer, Williams says. You can fertilize in-row, making nutrients more available to the plant. “We ran one trial this year and saw a 14-bu./acre yield advantage when we used starter fertilizer compared to an application with no starter fertilizer,” he says. This trial was in Wisconsin, which experienced a very cold spring in 2007.

Nitrogen fertilization is necessary to raise acceptable corn yields, says ISU's Sawyer. “Cutting below economic optimal rates will result in reduced yield and lower net return,” he says. “The same thing happens with over-fertilization, so it is important to look at proper fertilization rates and good management practices. There is no guarantee that fertilizer prices will be lower in the future, so not applying needed fertilization now might cost as much or more in the future.”

Offset costs with manure

Manure can be a good source of N for corn production and certainly can offset N fertilizer use. But it takes extra planning and effort to use manure as a nutrient resource, Sawyer says. “Not all manure nutrients are crop-available in the year of application, so some differential account for that is needed when determining the value of manure [which depends on its source],” he says.

Manure becomes more valuable as fertilizer prices increase, especially when P and K prices, as well as N prices, are high. Manure is more valuable when applied to fields that need P and K in addition to N, says Purdue's Camberato. However, he says, N availability is more uncertain with manure than anhydrous or 28% UAN, so you should consider applying a portion of the N requirement with manure and the remainder with inorganic fertilizer to reduce the risk of over- or under-applying N.

He also recommends using the pre-sidedress nitrate test (PSNT) to check on soil N supply in manured fields before deciding to sidedress N in corn.

Another option is to hire custom application. Dick Stiltz, Lincoln Land FS, Jacksonville, IL, says you should not dismiss custom work because you think the cost is too high. In many cases, it makes more sense to hire custom application services than to do it yourself when you factor in fuel, labor liability and other costs, Stiltz says.

He agrees with Warner that if you did not already make fall applications, you should lock in your spring supply. In fact, he cautions that if you do not already have fertilizer contracted, you may be shut out of getting what you need for spring.