A Saskatchewan farmer shares his opinion on how fertilizer market structure, pricing power, and global shocks can squeeze farm margins
As farmers continue to grapple with volatile input costs (Read: Fertilizer Prices Rise as Gulf Supply Tightens, one Saskatchewan farmer has offered a blunt assessment of why he believes fertilizer companies often appear to come out ahead during wars, sanctions, and global supply disruptions. He shared his comments on the popular prairies’ discussion forum Agriville.com (owned by Farms.com).
The comments come at a time when fertilizer prices, remain volatile and elevated. The conflict in the Middle East has exacerbated the situation. Analysts warn that fertilizer markets remain highly sensitive to global disruptions, leaving farmers exposed to sudden price swings during critical purchasing windows.
In a recent online discussion, the producer with the handle SaskFarmer argued that fertilizer markets are fundamentally different from grain markets—and that difference helps explain why fertilizer prices tend to rise quickly during global shocks and fall far more slowly afterward.
At the heart of the argument SaskFarmer argues that industry structure is the issue. Unlike grain markets, which involve thousands of producers selling into competitive global exchanges, fertilizer production is controlled by a relatively small number of multinational companies.
According to the farmer, this concentration gives fertilizer manufacturers significant pricing power, especially during supply disruptions. Building new nitrogen, phosphate, or potash facilities requires billions of dollars in capital and can take close to a decade to complete. As a result, supply cannot be ramped up quickly when shortages occur, allowing existing producers to benefit from tight markets.
Farmers, meanwhile, must purchase fertilizer every year, regardless of price cycles.
Demand That Cannot be Easily Deferred
The farmer also points to fertilizer demand as being largely inelastic. While producers can delay equipment purchases or land expansions during tough years, fertility decisions are far less flexible.
Skipping nitrogen applications can result in immediate yield losses, while cutting back on potash or phosphate can erode long-term soil fertility. As a result, most farmers continue buying fertilizer during price spikes, even if they reduce rates slightly. The argument suggests fertilizer companies understand this dynamic and price accordingly.
Prices Rise Fast—and Fall Slowly
Another key concern raised is what the farmer describes as “asymmetric price transmission.” When input costs such as natural gas rise, fertilizer prices tend to increase almost immediately.
When those same costs fall, prices at the farm gate often lag behind. The farmer attributes this to inventory dynamics, noting that companies frequently sell higher-priced product already in the system before lowering prices to reflect reduced production costs.
This lag, he argues, creates windows of elevated margins for fertilizer companies that farmers are unable to avoid.
Global Disruptions Amplify the Effect
Geopolitical events play a major role in these price swings. According to the post, wars, sanctions, and export restrictions can remove large portions of global fertilizer supply almost overnight. Examples cited include conflict-related disruptions, sanctions on major potash exporters, and export limits imposed by fertilizer-producing countries. When this happens, buyers rush to secure supply, traders hold inventory, and prices spike globally—even for producers not directly affected by the disruption.
Retail Structure Adds Another Layer
The farmer also highlights the structure of fertilizer retailing in North America. In many cases, the same companies that manufacture fertilizer also own large retail distribution networks. This vertical integration allows margins to be captured both at the production level and again at retail, further widening the gap between fertilizer pricing power and farm-level returns.
Farmers Face the Opposite Reality
In contrast, grain producers sell into highly competitive global markets. Individual farmers have little influence over pricing and limited ability to pass higher input costs forward. When fertilizer prices spike, crop prices do not always rise enough—or fast enough—to offset the increase, leading to margin compression at the farm level.
Timing Works Against Producers
Finally, the farmer points to timing as a recurring challenge. Fertilizer prices often rise after grain prices improve and acreage plans are already set. By the time fertilizer prices ease, the crop is planted and the buying decision has already been made.
A Systemic Issue, Not a Short-Term One
Taken together, Saskfarmer argues that fertilizer pricing outcomes during crises are not accidental or purely market-driven, but rather a result of structural factors that consistently favor producers and retailers of fertilizer over those who depend on it.
Farmer Reaction to the post
The post provoked various reactions.
“Need more pasture that requires no N,” says TASfarms. “More organic production. Prices for organic are more than double some 3 to 4 times chemical farming. Need more biology and less chemicals. Not retail biology. They are just about farming the farmer.”
“Annndddd nutrien redwater is planning their shutdown for April,” posts GoalieGuy847. “It’s easy to control the cost when you have the ability to throttle supply.”
“You should have bought your fertilizer in the fall,” chastises ForageFarmer. “No mention of make peace not war Trump in the post, (Putin's genocide of Ukrainians will be over in 24 hours, just a bunch of gullibles on here ) the creator of the hugh (sic – huge) recent spike in fertilizer and oil prices.”
While not all farmers may agree with every conclusion, the discussion reflects a growing frustration amongst producers over input costs—and a belief that the fertilizer market operates under very different rules than the ones farmers face when they sell their crops.