Dramatic increases in the price of farm fertilizers have prompted federal agriculture officials and a leading farm state attorney general to look into the causes and whether farmers have been subjected to unfair practices by an industry with few competitors.
Iowa Attorney General Tom Miller on Thursday said the inquiry wasn’t an antitrust investigation but “sort of the initial look to see what has happened.”
Miller said he approached an agricultural economist at Iowa State University, who will conduct an initial market study of fertilizer prices. Miller said he has the support of U.S. Agriculture Secretary Tom Vilsack as well as eight other states, though he declined to name them.
Iowa is the nation’s top corn producer and second leading soybean grower, and Miller said trade groups for those producers have told him farmers are reeling from high fertilizer prices as they buy supplies for the upcoming season. Those prices increases could ultimately be passed along to consumers, who already are seeing big jumps in the cost of food at grocery stores.
The price of anhydrous ammonia, which is used to provide nitrogen to optimize corn plant growth, is up more than 300% from last year. Other sources of nitrogen are also higher, including urea up 214% and liquid nitrogen up 250%. Potash, used to supply potassium to soybean plants, has increased 213%.
Miller said he has written letters to the top executives at the five major global suppliers of farm fertilizer to find out why prices have increased. A study by a Texas university found fertilizer prices rose in concert with the previous year’s farm income, which is likely an indicator of companies using market power to drive up prices rather than supply and demand, Miller said.
“I have this sinking feeling that we’re paying a price for allowing so few competitors in the ag area and in many other markets,” he said.
He said some increase was expected due to higher prices for natural gas, a major input cost for fertilizer makers, and supply and delivery disruptions globally. The question is whether those factors justify the magnitude of increase. Miller said it is possible the increases are legal but not justified by existing supply and demand factors.
The market study findings could lead to an investigation, Miller said, and shining a public spotlight on the practice could lead to some level of deterrence.
The Fertilizer Institute, an industry trade group, has said fertilizer prices are subject to a complex web of global supply and demand factors. Natural disasters, including ice storms and hurricanes, have affected production of natural gas and ammonia products in Louisiana, Oklahoma and Texas, and the COVID-19 pandemic caused some manufacturers to postpone necessary maintenance shutdowns until more recently.
The group said fertilizer delivery also has been affected by global logistics and supply chain issues.
Vilsack said in a press conference Thursday that the USDA will help Miller and other attorneys general with their study. Once that’s done, Vilsack said, “We may learn additional steps we can take.”
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