Why Does Nitrogen Fertilizer Cost So Much?

Eighty percent of the atmosphere consists of nitrogen. Unfortunately, nitrogen in the atmosphere can’t be used by plants. In nature, bacteria can convert nitrogen into a form that plants can use, but when growing crops, you can’t rely on bacteria to create enough nitrogen. That’s why you need fertilizer and one of the primary ingredients needed to make nitrogen fertilizer is natural gas.
In 1910, scientists discovered that if you combined natural gas with the atmosphere at a high temperature (about 900 degrees Fahrenheit) and under a high pressure (between 2,900 – 14,700 pounds per square inch), you could create anhydrous ammonia gas, which is called the Claude-Haber ammonia synthesis process. So the price of nitrogen fertilizer is directly based on the price of natural gas.
Even if natural gas prices remain low, competition for nitrogen fertilizer continues to rise throughout the world. Many parts of Asia need to increase food production for their growing population, which puts them in direct competition for nitrogen fertilizer needs around the rest of the world. The law of supply and demand takes over because if demand is high and supplies cannot keep up with demand, then prices will rise.
Now combine transportation costs (which requires fuel) and you get another component that keeps nitrogen fertilizer prices high. In short, nitrogen fertilizer costs so much because it relies on natural gas, worldwide supply and demand, and transportation costs that depend on the price of oil.
Farmers have no choice but to continue using nitrogen fertilizer to grow crops, so it’s important not to apply more fertilizer than you need and apply fertilizer only to those areas that actually need it. That’s where precision farming technologies can help.
Instead of relying on time-consuming soil samples, precision technologies such as satellites and drones, can analyze soil nutrient content quickly and accurately. This creates a prescriptive map that pinpoints exactly which areas need more fertilizer and which areas do not. The end result is a cost savings in applying nitrogen fertilizer more efficiently so you grow more crops with less waste.
If the cost of nitrogen fertilizer keeps rising, you can rely on precision techniques to lower your costs without hurting crop yields. The price of nitrogen fertilizer won’t likely go down in the future, but with precision technologies, you may find you can use less nitrogen and still increase crop yields, which means increasing profits as well.