Fertilizer plants seek natural gas

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Fertilizer plants seek natural gas BY ART HOVEY Lincoln Journal Star

First came a hot summer and power companies turning to natural gas to generate extra electricity for air conditioners. Then came a cold winter and heavy use of natural-gas furnaces.

Now comes a season of discontent for Nebraska fertilizer manufacturers, dealers and corn farmers: They will pay dearly for skimpy, but essential supplies of nitrogen fertilizer made from natural gas.

"Right now, this is a very unusual situation with natural gas, both in pricing and in availability," said Ray Rohlfing, manager of the state's only nitrogen fertilizer plant near Beatrice.

So unusual, in fact, that two of five sister plants to Beatrice, all also owned by Kansas City, Mo.-based Farmland Industries, are temporarily shut down - even though they would normally be operating at full capacity in January in preparation for the 2001 growing season.

Beatrice is one among others operating at reduced capacity because of the economic pressures that go with natural gas supplies.

"The main impact is that the price of gas is extremely high," Rohlfing said, "so our cost of production is higher than we would like to see it."

A near doubling in natural gas costs since 1999 is not good news for Mark Jagels of Davenport and other Nebraska farmers who tow white torpedo tanks filled with fertilizer through their fields each year to meet their corn's nutrient needs.

Natural gas is the main ingredient in anhydrous ammonia, the most popular form of nitrogen fertilizer, and irrigated Nebraska corn will typically need 160 to 210 pounds of nitrogen per acre on its way to harvest.

"I was talking to a fertilizer dealer this morning and he told me he can't even contract any anhydrous right now," said Jagels.

Jagels protected himself against some of the pain that goes with rapidly rising prices by contracting for a supply of nitrogen in November.

"The local supplier told me this morning that he has contracted more liquid nitrogen this year than he ever has."

Bob Anderson of the Lincoln-based Fertilizer and Ag-Chemical Institute offered national statistics Wednesday prepared by his industry that show nothing close to a June 2000 price spike as far back as 1985.

The fertilizer sector has had to deal with allocation of supplies in the past, Anderson said, "but this looks like the toughest one I've ever seen."

Rod Schroeder of the Aurora Co-op is among dealers trying to adjust to market circumstances.

"At this point, I would say it looks very uncertain, very volatile," he said.

He sees "a very, very good chance of allocation" for the first time in his 23 years at the co-op.

Anderson said dealers are lobbying for several partial solutions, including allowing power generators to use coal rather than natural gas and lowering trade barriers to allow for more natural gas imports.

"I don't need this," Anderson said of the nitrogen shortage. "This is going to be one of those bad years."

Reach Art Hovey at ahovey@journalstar.com or 473-7241.

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-- Martin Thompson (mthom1927@aol.com), January 04, 2001


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