10/03/05 USDA economist worries about fertilizer

10/03/05 USDA economist worries about fertilizer

Farm and Ranch October 3, 2005 During an appearance before a U.S. House Ag Subcommittee hearing last week, USDA chief economist Keith Collins said he isn't so worried about shortages of diesel fuel as he is about the availability of fertilizer due to the spike in natural gas prices. Collins: "If we look back historically in periods where we have had spikes in diesel prices and we've had some scarcity of supply, agriculture has done all right on the diesel side and been able to get their supplies. We had the natural gas spike in the winter of 200-2001 and we saw a substantial amount of fertilizer production capacity shutdown because of that spike. There is sort of a cap on nitrogen prices because we import 50% of what we use and that limits the price increase in nitrogen and when natural gas prices go up in the United States and they don't in other countries that causes a terrible price squeeze, at least for fertilizer producers, and they shut down. And so I have been worried about that more than I've been worried about diesel fuel." Prior to the recent hurricanes that hit the energy industry in the U.S. Gulf Collins said USDA had projected fuel and fertilizer input costs increasing by 3.3 billion dollars this year. Collins: "Post Katrina we have taken another look at it. This is not an official estimate, but using our models, it looks like a 4.8 billion dollar increase." Collins called that significant but could make no prediction on the number of farmers that may be driven out of business due to the current level of commodity prices and increasing energy prices. I'm Bob Hoff and that's the Northwest Farm and Ranch Report on the Northwest Ag Information Network.
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