Rabobank Analyst Explores the Increasing Cost of Fertilizer in New Podcast

NEW YORK, July 22 /PRNewswire/ -- As the cost of producing food has risen,
farmers are facing even higher costs for fertilizers according to a new
Rabobank podcast.

In the podcast, Analyst Erin FitzPatrick with Rabobank's Food & Agribusiness
Research and Advisory department delves into why the cost of fertilizer has
risen, in some cases, as much as 300 percent. (The full podcast is available
online at www.RabobankAmerica.com/Rabocast.)

Much of this increase in cost is because supply cannot keep up with demand.
FitzPatrick said, "Countries such as China and India are increasingly using
more fertilizer and the supplies coming on line to meet this demand just have
not grown at the same pace." (This information begins at 1:46 in the podcast.)

It is difficult to match demand because the components of fertilizer are
costly and take a great deal of time to produce. Nitrogen, for example, relies
heavily on natural gas, which has gone up, and phosphorous and potash come
from mines that cannot be developed quickly. And, as fertilizer becomes more
of a global commodity, the cost of transportation around the world is linked
to the rising cost of oil.

However, not all farmers are affected equally depending on the crops they
grow. "U.S. corn farmers, soy farmers and wheat farmers have all seen the
price they are receiving for their crops go up more than enough to
substantiate the fertilizer increases," said FitzPatrick. "Growers, of, for
example, fruits, vegetables, cocoa, commodities that haven't seen the price
increases are going to be more sensitive." (This information begins at 2:41 in
the podcast.)

To deal with these rising costs farmers and fertilizer producers are taking
action. Producers are increasing capacity, expanding mines and moving closer
to sources of natural gas. Farmers, on the other hand, won't stop using
fertilizers because all the nutrients they contain are needed for crop life.
But, they will make adjustments.

For example, farmers will "focus on being more efficient. They are going to
use soil testing, variable rate application, intensify their management and
re-evaluate their crop rotation," said FitzPatrick. (This information begins
at 4:22 in the podcast.)

Because costs are not likely to drop, farmers are beginning to take a more
long-term approach by making fertilizer purchases part of their business
strategies. Some are purchasing fertilizers year-round rather than seasonally,
pre-purchasing fertilizers or forward contracting.

The premier bank to the global food and agriculture industry, Rabobank is a
global financial services leader providing institutional and retail banking
and agricultural finance solutions in key markets around the world. From its
century-old roots in the Netherlands, Rabobank has grown into one of the 25
largest banks worldwide, with over $800 billion in total assets and operations
in over 35 countries. Rabobank is the only private bank in the world with a
triple A credit rating from both Standard & Poor's and Moody's, and is ranked
among the world's safest banks. In the Americas, Rabobank
(www.RabobankAmerica.com) is a leading financial partner to the entire
American food and agribusiness industry and is a specialist in sophisticated,
customer-driven solutions in the Global Financial Markets and Corporate
Finance arenas. Rabobank also provides retail and commercial banking services
in California; leasing; and real estate lending, operating loans, input
financing and crop insurance to American agricultural producers, input
suppliers and agricultural manufacturers.

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Erin FitzPatrick
http://profnet.prnewswire.com/Subscriber/ExpertProfile.aspx?ei=74608

SOURCE Rabobank America

Heather McElrath, +1-212-309-5181, heather.mcelrath@rabobank.com