There is debate going on in North Dakota and Minnesota about whether construction of two proposed nitrogen fertilizer plants in North Dakota-one near Grand Forks and the other at Spiritwood-would substantially decrease the price of nitrogen fertilizer for growers of the two states.
Dave Franzen, a North Dakota State University Extension Service soil specialist, has been quoted as suggesting the price of urea fertilizer could decrease by $100 per ton, but other "experts" suggest the price drop would more likely be as low as $25 per ton. Based on ballpark selling price of urea at $500 per ton, that $100 per ton drop would be a 20 percent price decrease.
It appears that the larger price drop is based on a belief that excess supply would drive competition based on price. The lower price decrease is based on the idea that manufacturers/producers of the fertilizer will price more closely to what the market will bear and national pricing of nitrogen fertilizers.
If price decreases came about, how would that affect area farmers' decisions on crop rotation and crops to plant that require a lot of nitrogen fertilizer compared to those that don't require nitrogen? Indications are that the lesser price drop would not be enough to have farmers change their crop rotation plans drastically.
Another NDSU Extension specialist, Joel Ransom, who specializes in cereal grains and corn, has been quoted as saying that crop prices, not the supply of nitrogen fertilizer, will determine what farmers raise. Both Extension specialists recognize that crop input costs have impact in planting decisions-pre-season calculations of return on investment do impact planting decisions.
SOURCE: Rich Keller, Greenbook