Iowa State Economists Issue Report Explaining Reasons For Fertilizer Price’s Sharp Rise, Not Price-Gouging

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Evidence appears to back the fertilizer industry’s claims that increased production costs and supply chain issues were responsible for higher fertilizer in 2021 and 2022, but more data is needed to support claims by some groups that fertilizer companies have engaged in price gouging, according to a new Iowa State University (ISU) report.

The recently released report click here. which was requested by Iowa Attorney General Tom Miller back in February 2022, sheds more light on the recent fertilizer price spike and what is going on within the industry currently.

DTN wrote about Miller’s look at the fertilizer industry and the ISU study earlier in February 2022 click here

The report by ISU’s Center for Agricultural and Rural Development said the expectation is fertilizer prices could decline in the second half of 2022. However, there are several factors that could prevent fertilizer prices from stabilizing both in the short and longer term, the report said.

RISING COST, SUPPLY ISSUES KEY

The report said the hypothesis that increased production costs and supply chain issues were the main cause of higher fertilizer prices in 2021 and 2022 appears to be true. These issues have pushed fertilizer prices to historically high levels over the past two years.

Because of these issues, the report also states, there is evidence the fertilizer market has seen some structural changes. Statistical analyses of these changes point to underlying energy costs and, to a lesser extent, increased farm demand having more influence on fertilizer prices.

However, ISU was unable to determine whether the claim by some food and agriculture groups that fertilizer companies have engaged in price gouging is true.

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