The U.S. International Trade Commission – a federal agency that advises the legislative and executive branches on trade-related matters – heard testimony June 16 on the skyrocketing cost of fertilizer for American farmers. The hearing focused on the urea ammonium nitrate market and potential actions against Russia and Trinidad and Tobago.
The hearing comes after CF Industries filed a petition with ITC in late 2021, requesting that the commission place tariffs on UAN, which is used in liquid fertilizers imported from Russia and Trinidad and Tobago. Shortages and prices have since increased exponentially, shares the National Corn Growers Association. The hearing marks a final phase of the investigation, with a decision expected as early as this summer.
“Some farmers are electing not to use UAN at recommended rates and, therefore, sacrificing yield because of the shortages,” said Nebraska corn grower Andy Jobman, who represented the National Corn Growers Association during the hearing. “As a farmer and agronomist, I can assure you that we study the optimal rate of UAN that should be applied and are cutting back given the shortages in the market.”
This is an incredibly important issue for American farmers, Jobman told the commissioners.
“Fertilizer is one of our greatest inputs,” he adds. “Nitrogen fertilizers, including UAN, account for more than 50% of fertilizer expenses. Even before the tariffs went into effect in December of last year, we were paying more than 300% for UAN year-over-year.”
ITC should also understand that the market needs diversity of supply, Jobman warned.
“Hurricane Ida, and the resulting shutdown of one of CF Industries’ key facilities, led to shortages in the market,” he said. “Winter storms have often led to market disruptions as well when other domestic producers go off-line, and U.S. fertilizer producers also export needed production out of the United States.”
Rep. Randy Feenstra, R-Iowa, also testified on the impact of the rising cost of inputs on farmers in his district which is the larger producer of crops and hogs and second largest congressional district in terms of market value of agricultural products sold.
“Fertilizer prices have hit all-time highs, as prices of UAN rose nearly three-fold over the course of 2021 and further in 2022. Given the unprecedented volatility for farmers and ranchers over the last several years, it is crucial that the United States avoid imposing unnecessary costs that could further limit the fertilizer supply and cause food supply shortages,” Feenstra testifies. “Soaring fertilizer prices have caused increased stress and uncertainty for American farmers and are impacting farmers’ ability to plant crops and ensure food security.”
Feenstra says the global conditions have changed dramatically since the ITC began examining the UAN market utilizing market data from 2019 to 2021. “Russia’s invasion of Ukraine has fundamentally altered the market for UAN. While I trust your rules and regulations regarding the backward review to evaluate the economic harm caused by bad actors, I would ask for the Commission to consider how that data deviates from the current reality and foreseeable future in these economic times. Imported fertilizer provides a large portion of coverage for our crops and this volatility has farmers very concerned,” Feenstra adds.
Feenstra was one of 86 House and Senate colleagues who wrote to the ITC earlier this year urging them to reconsider the duties placed on phosphate fertilizer producers imported from Morocco and to suspend the current process to impose new duties on urea ammonium nitrate fertilizer from Trinidad and Tobago.
“That letter makes a clear case surrounding the impacts that these duties will have on farmers. However, in the past three months, costs have already escalated, and supply issues are beyond what the letter described,” Feenstra says. “Congress has various tools that it may utilize to help lower costs in the medium and long term, and I continue to work with my colleagues to offer these solutions. However, costs are quickly rising now.”
Before the hearing, Rep. Tracey Mann, R-Kan, and Sen. Jerry Moran, R-Kan., led several of their colleagues in sending a letter to the U.S. Department of Commerce, urging it to consider the record-high fertilizer cost and suspend the duties it placed on urea ammonium nitrate fertilizer imports from Trinidad and Tobago.
“The Department’s decision to exercise its discretion to increase the producer/exporter’s cost of production, and thus its dumping margin, has effectively shut down all imports of [urea ammonium nitrate] UAN from Trinidad and Tobago at a time when U.S. fertilizer prices are at all-time highs,” the members wrote. “Unfortunately, the Department’s preliminary determination is only contributing to extreme hardship to America’s farmers.”
Fertilizer comments sought
As part of an examination on concentration in the ag industry, USDA is extending the timeline for comments from the public on its “Access to Fertilizer: Competition and Supply Chain Concerns” notice originally published in the Federal Register on March 17, 2022. The new deadline for comments is July 15, 2022. The previous deadlines for comments were May 16, 2022, and June 15, 2022.
“We are extending the deadline for comments an additional month to enable commenters to provide additional feedback regarding the role of capacity expansion and related strategies to directly enhance competition in the fertilizer market,” says Andy Green, USDA’s senior adviser for Fair and Competitive Markets. “USDA is committed to using every tool at its disposal to enhance competition and improve resiliency in the fertilizer market. Finding ways to encourage sustainable and independent choices for fertilizer supplies demonstrates the Biden-Harris administration’s ongoing investment in American goods and services to rebuild a more resilient, secure, and sustainable economy.”
Farm Action and 23 signing organizations urged the USDA to make policy changes that would allow the nation’s farmers to “escape from under the thumb of highly-consolidated fertilizer cartels,” according to a statement from Farm Action.
The groups made several recommendations to decentralize the fertilizer industry, such as preventing current and future investments into domestic fertilizer production from “[ending] up in the pockets of the same players who have been dominating this industry.” The groups also encouraged the government to more actively monitor price-gouging and aggressively prevent mergers between fertilizer corporations. In their closing, the groups pointed to the 2023 Farm Bill as an opportunity for the USDA to reduce the United States’ dependence on fertilizer cartels by expanding current cover crop programs and increasing funding for research around soil health and cover crop demonstration trials.
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