Edward Hall with Custom Ag Formulators examines bottles at the company’s Fresno manufacturing facility. Photo by Edward Smith

A perfect storm of obstacles has one local fertilizer manufacturer anticipating a heavier-than-normal slowdown.

Ryan Steward, vice president of Fresno-based Custom Ag Formulators, said the confluence of supply chain and labor issues — coupled with lingering Covid, war in Ukraine and uncertain water availability — has left buyers in the ag community divided on how to approach the coming year.

Steward said the price of raw materials rises almost every other week. The most notable ingredient for them is phosphoric acid, a key component of their most popular product. In March 2021, it could be purchased for $1.42 a pound. Now, it’s going for $5.50 a pound.

When he saw that price, he knew prices would have to go up for the farmer.

“It’s not us trying to gouge people,” Steward said. “I mean, we’re trying to keep our margins as —  you know — as little as we can to help out the end user.”

Leadership had even discussed whether it would be worth it to continue purchasing the raw materials. The price for their product had to go up from $20 a gallon to $40 a gallon.

“We knew people just weren’t going to be able to afford that,” Steward said.

Knowing some people may need the product and would be able to pay the elevated prices, they continued with production.

For farmers, the lure of rising commodity prices comes in the face of higher input costs elsewhere, said Daniel Hartwig, president of the Fresno County Farm Bureau.

Fertilizers are up on average 80%, said Hartwig. Diesel prices have doubled in some areas, according to Agweb.com. That means fueling a tractor can cost $1,000 a day. California diesel prices averaged $6.05, ahead of the national $5.57 average price for highway diesel. Water takes an ever-increasing chunk of real estate in every farmer’s mind. Water costs have made most crops unprofitable.

In the past, almond prices could buoy other crops, said Hartwig. But supply chain problems have collapsed almond prices. The valuable nut that farmers could rely on to bring upwards of $4 a pound has now dropped below $2. Growers have relied on foreign markets to sell excess production, but now almonds are sitting at the dock.

Overseas shippers can make more money sending back empty containers to points of origin where they don’t have to wait to be filled. In many cases it’s not worth spending the extra few days to unload the nut, said Hartwig.

This means that growers have to turn to domestic markets to sell their commodities.

What Steward is seeing is more bearish activity from farmers. Most of the planting for this season has already happened and decisions about purchasing finalized. But now manufacturers have to begin thinking about next season.

Steward anticipates a plummet coming. It was a busy year, but not as busy as normal, he said. From now until the first rains, this is the slow season for fertilizer manufacturers. Because of the expected downturn, he has begun running his crews leaner.

The problems faced at the field have begun trickling downward to those suppliers relying on the growers.

“I think they were all holding out and unfortunately, I think nothing got better,” said Steward. “Everybody went with what they had, that’s why we saw the slow down.”