On May 28, I provided expert testimony before the New Jersey Assembly Agriculture and Natural Resources Committee on recent fertilizer price trends and what they mean for New Jersey farmers. The hearing focused on agricultural conditions affecting farm viability in the state.
My comments focused on recent fertilizer price trends, the major factors affecting the prices, and what we should expect moving forward.
Fertilizer markets have shifted from the relatively stable conditions seen before 2021 to a higher-price, higher-volatility environment. Prices rose sharply in 2021 and reached record-high levels in 2022. Although prices declined in 2023 and 2024, they did not return to pre-COVID levels. More recently, fertilizer prices have again come under upward pressure.
This matters because fertilizer is one of the most important production inputs for many farms. When fertilizer prices rise, farmers face higher operating costs before they know what yields, market prices, or weather conditions will look like for the season. For New Jersey producers, these cost pressures are especially important because many farms operate on smaller acreage, grow high-value crops, and face tight margins in a high-cost, peri-urban production environment.
Currently, nitrogen products appear to be under the strongest price pressure, particularly ammonia and urea. Phosphate prices also remain elevated, while potash has been relatively more stable. These differences matter because fertilizer products are not perfect substitutes. A farm cannot simply switch away from nitrogen if nitrogen is essential for crop growth.
(If you are interested in estimating how much nitrogen, phosphorus, and potassium fertilizer may cost for your farm, you can use this fertilizer cost calculator.)
Several forces are driving these price movements.
First, fertilizer markets are exposed to geopolitical and trade risks. Global fertilizer production and exports are concentrated in a relatively small number of countries. Russia and Belarus are major suppliers of potash, nitrogen, and phosphate products, while the Persian Gulf region plays an important role in ammonia and urea exports. When export flows, shipping routes, or insurance markets are disrupted, fertilizer becomes more expensive and riskier to secure. Even the possibility of disruption can create a price premium before actual shortages occur.
Second, energy costs remain central, especially for nitrogen fertilizers. Natural gas is both an energy source and a key input in nitrogen fertilizer production. When natural gas prices rise, the cost of producing ammonia and urea also rises. This is one reason nitrogen fertilizer prices remain highly sensitive to global energy-market disruptions.
Third, local delivery costs matter. Farmers do not pay a global benchmark price; they pay a delivered local price. For New Jersey farmers, fertilizer must move through ports, terminals, warehouses, dealers, and trucking networks before reaching the farm. Because fertilizer is bulky and costly to transport, freight, handling, dealer margins, inventory costs, and seasonal timing can all cause the price paid by farmers to differ from national averages.
Looking ahead, fertilizer prices may partially decline if energy prices fall, shipping routes normalize, and trade restrictions ease. However, local prices may not fall immediately. Fertilizer prices can be sticky at the retail level because dealers may still be working through higher-cost inventory, and because freight, storage, financing, and handling costs adjust slowly.