… Not the headline we’ve come to expect in the agricultural industry this year, as losses have been felt in a rough growing season. However, the U.S. International Trade Commission (ITC) ruling against imposing tariffs on nitrogen fertilizers imported from Russia and Trinidad and Tobago was welcome news to America’s farmers this week.
CF Industries requested the tariffs on imported nitrogen fertilizer, claiming losses. Meanwhile, farmers across the country experienced skyrocketing prices for the product.
As Texas farmers began to prepare for the 2022 growing season, Texas Corn Producers (TCP) recognized the need to advocate for its farmers when fertilizer costs account for approximately 36% of a farms’ operating expenses. TCP Issues Committee Chair Dee Vaughan, who farms in the Texas Panhandle, said the TCP board saw this as an issue statewide.
“Texas farmers are among the first in the nation to prepare their fields to plant due to climate,” Vaughan said. “We saw an astonishing 264% increase in the cost of nitrogen fertilizer alone from South Texas up to the Panhandle in just over 2-years. Our board knew action must be taken to call attention to an issue that posed harm to the viability of family farm businesses.”
TCP worked with 19 other state corn organizations to commission a study on nitrogen fertilizer costs and impact on farms through the Ag and Food Policy Center (AFPC).
Despite the fertilizer industry’s assertion of losses, which it used in its petition for tariffs, the AFPC study found trends to the contrary.
The fertilizer industry asserted national inflation and supply chain issues were key factors of price increases felt by its consumers, America’s farmers. Yet, the AFPC study found the increase in one type of widely used nitrogen fertilizer, anhydrous ammonia, the value of natural gas accounts for only 15%, or $102, of recent price increases – a stark contrast of the industry’s claims that natural gas accounts for 70-90% of variable production costs for the fertilizer.
The study also looked at the historical trends of fertilizer prices.
“As part of this study, we conducted a historical analysis going back to 1980 and found that fertilizer costs tend to go up when corn revenues increase,” Joe Outlaw, Ph.D., the AFPC co-director, says. “Notably, these prices tend to go up exponentially even after accounting for natural gas prices and higher demand.”
The study indicates that a mere four companies, including CF Industries, Nutrien, Koch and Yara-USA, account for approximately 75% of the total domestic nitrogen fertilizer production.
“Our findings raise serious questions and clearly help explain the frustration with this situation farmers are feeling nationwide,” Outlaw said.
Armed with that hard data from the AFPC study, TCP worked with fellow state corn organizations and the National Corn Growers Association to call attention to the matter.
The organizations raised alarm to the impact looming tariffs would have on America’s farmers who were already faced with a hefty price tag.
“Any import tax on nitrogen fertilizers would raise prices for both domestically produced and imported fertilizer by the full amount of the tax rate multiplied by the pre-tax price,” according to the AFPC study.
Texas Corn Producers Association, the advocacy arm of TCP, shared the study’s information and the real-world impact on family farms with national, regional and local media, Ruled by Reason podcast, and regulatory and policy influencers in Washington.
“ITC’s ruling this week is a solid step forward,” Vaughan said. “Something needed to be done to keep America’s farmers from bearing the burden of an industry pushing the limit of how thin they can cut a farms’ margins. TCP will continue to advocate for our family farms who are being squeezed by the fertilizer oligopoly.”