We are approaching the end of 2021 - this past year or so of the Pandemic has been rough on us all in so many respects. It felt like things were finally starting to get back to normal a bit this year, right? Businesses were kicking back up, everything seemed to be on the upswing. Now…economically…there are crunches coming at us from every direction.
The cost of gas has gone up, the cost of goods has gone up - including groceries and clothing, and even the price of toys for the holidays has gone up.
When it comes to the lawn care industry, we are feeling the effects as well. The cost of fertilizer rose at least 80% higher from 2020 to 2021 with fears that it might get worse before it gets better. There is a global shortage of Fertilizer and it’s going to lead prices to record highs in 2022.
How are supply chain issues affecting the lawn care industry?
1. Natural Gas:
Natural gas alone can account for up to 70% of the cost of fertilizer.
As we know, the 3 main components of fertilizer are nitrogen, phosphorus and potassium. There are many different sources of nitrogen - the main one being utilized in the lawn care industry is Uria. Uria is produced using natural gas.
For perspective: the cost of natural gas has gone up by over 180% in 2021 alone. As you might have guessed, this correlates closely with the cost of fertilizer. The cost of Uria and potassium have gone up 160% in the same time.
2. Global Markets:
China is the world's largest producer of nitrogen fertilizer. China has slowed their production of uria/fertilizers as a result of the cost of natural gas being so high. Instead of exporting as much, they are keeping much more of the supply within their border. This is really straining the US supply as most fertilizer products in the US are imported.
Ironically, we also have drought contributing to the rise in the cost of fertilizer products. Many hydroelectric dams throughout the world have not been able to produce as much electricity, causing us to use more expensive energy sources like natural gas as a whole.
3. Imports/Supply Chain:
As you might have heard, many of the cargo ports in LA are backed up. This dramatically affects what you, the consumer, is going to pay for fertilization services next year.
In October of this year, there were regularly around 80 barges backed up in the San Pedro Bay in Los Angeles, patiently waiting to unload their cargo in a major traffic jam.
A year ago it cost about $2,500 to bring a container on a barge from Asia. Today, it’s upwards of about $25,000.
When the barges are finally able to unload their cargo, it is transferred to a freight truck. Trucks are another pinch point currently in our supply chain. As a country, we are roughly 80,000 CDL drivers short.
At the end of the day, it takes fuel to produce fertilizer and we have to remember that there are so many touch points along the supply chain that are affected by rising fuel costs that range from getting the supplies on a barge, to a truck, to a distributor, to businesses, and eventually to you, the customer.
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Since 2007, Green Meadow Lawn Care has provided homeowners throughout the greater Tolland, Connecticut area with premium fertilization programs, tick control, mosquito management, seeding & aeration and tree & shrub care.
To speak to our Customer Service Manager, please call Dave (view Dave's video bio here) with any questions. Dave has been in the industry for 30 years and is always happy to help with his expert advice.