Fertilizer companies have capacity they’re not using, the Family Farm Action Alliance says
By Diego Flammini
Staff Writer
Farms.com
A U.S. ag industry group wants the Department of Justice (DOJ) to open an investigation into increasing fertilizer prices.
The Family Farm Action Alliance, which works to “create a food and agriculture system that works for everyday people rather than a handful of powerful corporations,” wrote a letter asking the Antitrust Division of the DOJ to examine fertilizer prices farmers are being asked to pay.
September 2020 pricing for anhydrous ammonia was about $415 per ton.
The prices have continued to climb since, said Joe Maxwell, president of the Family Farm Action Alliance.
“Through our network of farmers around the country, we were alerted about a huge spike in fertilizer prices,” he told Farms.com. “By September 2021 the price had risen to $805 per ton, and by the third week of October the prices were over $1,400 per ton,” he told Farms.com.
Four companies account for about 75 percent of fertilizer production and sales in the U.S. – CF Industries, Nutrien, Koch and Yara-USA, Maxwell said.
Some of the manufacturers have claimed higher natural gas prices are leading to the increases in fertilizer costs.
But studies of fertilizer manufacturer data prove otherwise, Maxwell said.
“We took a look at third-quarter and annual reports and it’s clear that they have the capacity, they’ve idled capacity and it appears they have created the shortage themselves,” he said. “And if there was an increase in demand, it shouldn’t have resulted in these significant price hikes.”
The Family Farm Action Alliance studied reports from Nutrien and Yara.
Nutrien’s report indicates that “due to historically low ammonia prices, (it) curtailed production at (its) Trinidad facility in 2020, while maintaining flexibility to respond to improvement in market conditions.”
And Yara’s data says a natural gas spike in Europe had a “limited impact on finished fertilizer production to date.”
Part of the DOJ’s antitrust division’s mission is to “promote economic competition…”
It’s clear these fertilizer manufacturers are not acting fairly, Maxwell said.
“We’re still doing research, but we felt the evidence is clear to us that the DOJ should be aware and that they should consider looking into this from an antitrust lens,” he said. “We want the DOJ to be aware of what’s going on.”
If fertilizer prices continue to rise, all of America will feel the effects.
If farmers decide to use less fertilizer, it could result in lower yields and so on, Maxwell said.
“Lower yields can result in higher food costs, meaning all of us could be impacted by this issue,” he said. “We’re encouraging farmers to look at practices that reduce their reliance on fertilizer.”
Farms.com has contacted fertilizer manufacturers for comment.