Geopolitics, Tariffs, and the Unpredictable Fertilizer Market
The current state of the fertilizer market is one of daily fluctuation and global complexity, according to Veronica Nigh, Chief Economist for The Fertilizer Institute (TFI), who spoke with Farm Director KC Sheperd.
Addressing the mixed reports of rising and falling fertilizer prices, Nigh offered a characteristic explanation: “Well, you know, I’m going to give you a typical economist answer. There’s a lot of supply and demand fundamentals that are changing every day.” She noted that this volatility, which feels like “the name of the game… for the last several years,” is heavily influenced by factors outside the farm gate.
A Break for Growers: The Removal of Tariffs
For the upcoming spring season, there’s a positive element on the supply side, largely due to recent US policy. Nigh highlighted a significant move by the administration:
“The President decided to remove tariffs, those IEEPA tariffs on finished fertilizer products, and that’s really going to help some of those imports on fertilizers really return to some normal flows, which helps because 35% of all fertilizer supply in the US is imported.“
Despite this positive change, Nigh detailed the disruptive impact of previous trade measures. When asked about the effectiveness of tariffs, she pointed to hard data suggesting a negative effect on imports:
“You know, I think that’s a that’s a pretty complex… answer. There’s a lot of things at play, but… phosphate imports were down almost 50% of this year relative to last year. We saw a drop off in nitrogen imports relative to last year, in a year where we saw some pretty strong demand for fertilizer…”
The Global Triad: Russia, China, and the Middle East
The biggest drivers of supply chain anxiety remain geopolitical. KC Sheperd asked if the US has overcome its supply chain issues, to which Nigh responded that the market has fundamentally shifted since 2021, and “you can’t discount the overarching role that China and Russia play in the fertilizer market.“
- Russia maintains a significant influence, accounting for 15% to 20% of the export market across all major nutrients (N, P, and K). The Russia-Ukraine conflict continues to impact trade flows and is a “big boulder out there” hanging over the market.
- China fundamentally altered the global phosphate trade in 2021 when it decided to limit its exports. “China’s 40% of global production of phosphates,” Nigh explained, noting that when they reduced exports by 40%, “the global phosphate market has been trading short and has been tight.”
- The Middle East adds major volatility, particularly for nitrogen. The US relies on this region for sources of nitrogen and phosphates (40% of phosphate imports come from Saudi Arabia), meaning “any conflict in that part of the world, you see that reflected in availability and prices.”
Nigh concluded that this new reality requires growers and market observers to expand their focus beyond domestic markets: “You kind of have to be a geopolitical watcher and an expert, which, you know, that’s that’s a lot to put on growers… and unfortunately, I don’t really see that going away.”
