A representative for the American Gas Association (AGA) said the price of Americans’ Thanksgiving dinners this past weekend depends largely on the natural gas that goes to produce fertilizer for American farmers.
These statements come after an economist with the American Farm Bureau Federation said that “the big drivers” of higher fertilizer prices are energy costs, specifically the cost of natural gas.
“Ammonia is the building block for nitrogen fertilizer, and it is produced using natural gas,” wrote Adam McKay, AGA public relations manager, in a blog post on the AGA website. “Between 70 and 80 percent of the energy used to make fertilizer comes from natural gas.”
“Reliable domestic supply helps stabilize production and supports the steady flow of food from fields to shelves,” McKay wrote. “When farmers have secure access to natural gas, families are more likely to have the ingredients they count on for their holiday menus.”
He referenced an AGA report, “Advancing America’s Agriculture,” that showed the U.S. agricultural sector “consumers about 1.7 trillion cubic feet of natural gas a year,” which accounts for “nearly 15 percent of all commercial and industrial gas use.”
“Those numbers reflect the energy behind crop drying, food processing, storage and the fertilizers that raise yields for wheat, corn and other staples that end up on Thanksgiving tables, either directly as ingredients or indirectly as food for your Thanksgiving turkey,” he wrote.
Faith Parum, an economist with the American Farm Bureau, said that the “big drivers” of recent increases in fertilizer costs are energy costs, due to the importance of natural gas to the production of fertilizers.
”Nitrogen fertilizers rely on natural gas and so other countries have had decreased production due to conflict, as well as geopolitical disputes overall,” said Faith Parum, an economist with the Farm Bureau, in an interview on the Newsline Podcast. “There will just, again, be that uncertainty as you know, the world continues to move around through these geopolitical disruptions.”
Natural gas is both a feedstock and a power source for nitrogen fertilizer production, meaning higher gas prices directly raise fertilizer costs. Parum said energy remains a critical factor in fertilizer markets because “natural gas is the main feedstock for nitrogen fertilizer,” and that rising gas costs in 2025 and 2026 are likely to tighten global supply and margins.
Fertilizer manufacturer Yara International also reported this year that it expects gas costs to be $60 million higher in the third quarter and $10 million higher in the fourth quarter compared to last year, underscoring how energy prices are pressuring the sector’s bottom line.
In Australia, fertilizer producer Dyno Nobel said that rising gas prices have added $40 million to $80 million in annual operating costs at its Phosphate Hill plant, a situation that has put hundreds of jobs at risk, reported the Courier-Mail.
Globally, fertilizer prices have risen about 15 percent since April, according to a Rabobank report summarized by Wisconsin Ag Connection, with phosphate prices up nearly 19 percent.
