Trade Policy Hurting American Farmers


Photo from stitchenal

John Quinlan, Contributor

Seldom do you go to the grocery store these days and not hear complaints about rising food prices. It may be surprising to hear that one of the main causes for high priced food is the scarcity and increasing cost of fertilizer.

The agricultural community faces many challenges due to the Covid-19 pandemic–supply chain issues, labor shortages, and inflation–but perhaps the biggest threat it faces is the rising cost of fertilizer, which has risen as much as 200% in the past year.

According to a Texas A&M University AFPC report, the average feed grain operation will pay $128,000 more for fertilizer in 2022.

So why is fertilizer so expensive?

The United States has imposed tariffs on foreign imports of fertilizer, eliminating competition for American companies such as The Mosaic Company. It is not broadly realized, but The Mosaic Company dominates the American fertilizer market and holds about 90% of the production market for phosphates in the United States. The company strongly lobbies policymakers to enact restrictive trade policies that boost its own interests.

Indeed, tariffs on fertilizer imports from some of the largest fertilizer producers–Russia, Trinidad and Tobago, and Morocco–have been implemented by the U.S. Department of Commerce in response to petitions filed by The Mosaic Company. These tariffs only seem to benefit this domestic near-monopoly and hurt American consumers.

With foreign trade partners hindered from entering the U.S. market, the acceptably priced supply does not meet the demand for fertilizer. Morocco holds more than 70% of the world’s phosphate reserves and supplies 60% of the imported fertilizer to the United States. The U.S. Department of Commerce imposed countervailing duties (CVDs) of 20% on Moroccan phosphate fertilizer imports.

The Commerce Department has also imposed CVDs on nitrate fertilizers from Trinidad and Tobago, another major trading partner. This decision comes at a time when nitrate fertilizer prices have reached all time highs. In 2021, Trinidad and Tobago supplied 996,000 short tons of fertilizer to the United States.

Even before the Russian-Ukraine conflict, in 2021, similar tariffs were imposed on nitrate fertilizer imports from Russia.

Brooke McMullin, the Vice President of International Raw Materials LTD explains the importance of fertilizer price on the cost of food, “Of course, if the price of fertilizer increases, so does the cost of producing corn and every other crop that relies on these fertilizers, and those price increases are borne by livestock producers as well. Consumers, particularly low-income families, suffer. In fact, the whole food chain has been hurt by the surge in fertilizer prices.”

In response to this crisis, more than 80 members of Congress have sent a letter to the U.S. International Trade Commission calling for an end of these duties placed on fertilizer imports. They argue that these tariffs make it difficult for American farmers to keep up with the high costs of crop inputs: “Given the last several years’ unprecedented volatility for farmers and ranchers, it is crucial America avoids imposing unnecessary duties that could further limit the fertilizer supply or raise its cost.”

These duties have created unnecessary costs that hurt American farmers, and in turn, American consumers. The only party that seems to benefit from these restrictive trade policies is the gigantic Mosaic Company. Americans are already struggling with the effects of inflation and rising prices; it is imperative that our government enact policies that benefit the consumer and not the fertilizer lobby.