New Legislation Would Require USDA to Study Fertilizer Industry
AgDay 12/15/23 - Fertilizer Investigation
New legislation, called the Fertilizer Research Act, has been introduced to require USDA to study competition and trends in the fertilizer market.
The bill was introduced by Senators Chuck Grassley (R-IA), Joni Ernst (R-IA) and Tammy Baldwin (D-Wisc.). Grassley shared with Ag Day’s Michelle Rook it is a result of the fertilizer industry being too concentrated into too few hands.
“This whole bill is to get the Secretary of Agriculture looking into all this. So, if there is collusion, if there's antitrust, he can suggest action to the FTC and to the Justice Department to take action through a lawsuit,” he says.
Within one year of the bill’s passage, the Secretary of Agriculture, in consultation with the Economic Research Service, would be required to issue a report on USDA’s website regarding the U.S. fertilizer industry.
Specifically, the report should include:
• A description of impacts on the fertilizer market that influence price
• Market trends in the past 25 years
• A description of the imported fertilizer and market impacts
• Impacts of anti-dumping and countervailing duties
• A study of fertilizer industry concentration
• A study of emerging fertilizer technologies
• A description of whether current public price reporting is sufficient for market transparency
“Farmers’ bottom lines thin as the price of fertilizer rises. With fertilizer being one of the ag industry’s highest input costs, it’s problematic farmers have such a limited window into market fluctuations. Our bill will provide farmers in Iowa and across the Heartland with needed transparency and certainty as they navigate production costs,” Grassley said in a release about the legislation.
At the same time, Josh Linville, vice president of fertilizer at StoneX, says while he appreciates the Congressional attention to fertilizer prices, the market has somewhat corrected the problem with values down sharply from the record highs 18 months ago.
“Overall, a lot of the high price situation we've been dealing with have largely been solved and if you look at things like urea, I thinks its urea, UAN and potash are all down 60% from where they were at the high. I think phosphates closer to 40,” Linville says. “So there's been a lot of the price depreciate since of highs. Obviously, we'd all like to see a cheaper but it's a good ratio today compared to where corn values are.”
Linville also believes the high prices were less about anti-competitive practices and more about global supply and demand fundamentals.
“It's Chinese government export restrictions, its European natural gas markets being sky high to where they normally are and production issues around the world. We thought we'd lost exports from Russia when they invaded Ukraine,” he says. “So, a lot of the factors that have driven volatility have had much more to do with the international market than has been domestic.”
Linville adds he agrees with the bill’s aim to improve price transparency in the industry.
Sen. Grassley shared he aims to have this legislation included in the next Farm Bill but is open to other avenues for passage.
To view the legislation in full, click here.
