June 10, 2022

Jaina Nian

Agricultural Marketing Service, USDA

Room 2055–S, STOP 0201

1400 Independence Avenue SW

Washington, DC 20250–0201

RE: Comments on Access to Fertilizer: Competition and Supply Chain Concerns (87 FR 15191):

Docket number AMS-AMS-22-0027; Page 15191-15194;

submitted online via www.regulations.gov

corporations have used their market dominance to price-gouge farmers by tying fertilizer prices

to commodity prices, instead of to natural market pressures. They have done so under the guise

of global crises, mounting costs, and supply chain issues; however, their own financial

statements and sky-rocketing profits clearly refute these excuses. Instead, they are effectively

robbing farmers of their profits, contributing to the hollowing-out of rural America, and driving

up food prices for the consumer. In response, we ask the USDA to work towards decentralizing

fertilizer production, while simultaneously decreasing our dependence on synthetic fertilizer

cartels by incentivizing alternative forms of fertility management.

Overview of the fertilizer industry

The 1980s marked the beginning of a period of rapid consolidation within domestic

Nitrogen Fertilizer Production Industry.” Choices. Quarter 2. Available at:

https://www.choicesmagazine.org/choices-magazine/submitted-articles/the-history-consolidation-and-future-of-the-u

s-nitrogen-fertilizer-production-industry

welfare over competitive markets.

2

resulted in more lenient and permissive merger and acquisition reviews.

mid-2000s, the number of fertilizer firms declined from 46 to 13.

policies that incentivized corn production (and subsequently fertilizer) and simultaneously

fertilizer input sectors (nitrogen, phosphorus, and potassium), only a handful of corporations

dominate US production and supply. In 2019, only four corporations represented 75% of the

production and sale of nitrogen-based fertilizer in the US: CF Industries, Nutrien Limited, Koch,

and Yara-USA.

6

Today, just two companies supply the entirety of North America with potash, a

potassium-based fertilizer: Nutrien Limited and Mosaic Company. In phosphorus, Mosaic

Company is estimated to control approximately 90% of domestic production.

7

Despite existing fertilizer cartels, corporations in this highly-consolidated industry are

still on high alert for merger and acquisition opportunities — leading to further industry

Nitrogen Fertilizer Production Industry.” Choices. Quarter 2. Available at:

https://www.choicesmagazine.org/choices-magazine/submitted-articles/the-history-consolidation-and-future-of-the-u

s-nitrogen-fertilizer-production-industry

7

Vasquez, J. 2020. “U.S. Fertilizer Prices Surge to Decade High.” Farm Progress. Available at:

https://www.farmprogress.com/fertilizer/us-fertilizer-prices-surge-decade-high

6

Bekkerman, A., G.W. Brester, and D. Ripplinger. 2020. “The History, Consolidation, and Future of the U.S.

Nitrogen Fertilizer Production Industry.” Choices. Quarter 2. Available at:

https://www.choicesmagazine.org/choices-magazine/submitted-articles/the-history-consolidation-and-future-of-the-u

4

Bekkerman, A., G.W. Brester, and D. Ripplinger. 2020. “The History, Consolidation, and Future of the U.S.

Nitrogen Fertilizer Production Industry.” Choices. Quarter 2. Available at:

https://www.choicesmagazine.org/choices-magazine/submitted-articles/the-history-consolidation-and-future-of-the-u

s-nitrogen-fertilizer-production-industry

3

Farm Action. 2022. Comments submitted to the FTC and DOJ re: Request for Information on Merger

Enforcement. Available at:

https://farmaction.us/wp-content/uploads/2022/04/Farm-Action-Merger-Guidelines-Comment-4.21.22.pdf

2

domestic nitrogen production.

9

In October of 2018, Yara announced that in order to “streamline”

its phosphate production in Brazil, it would be acquiring 100% of the shares of Galvani

Indùstria, Comércio e Serviços S.A., of which it had been a majority shareholder since 2014.

10

Meanwhile, Nutrien has also been actively securing its position of market dominance by

end of 2018, Nutrien had sold 24% of its stake in Chile’s SQM (Sociedad Quimica y Minera) to

China’s Tianqi Lithium Corp and its 28% stake in Jordan’s Arab Potash Company to China’s

state-owned SDIC Mining Investment Company. It then applied the revenue from these two sales

to expand its network of U.S.-based farm retail outlets, which sell seeds and pesticides in

addition to fertilizer.

As a result of this period of rapid consolidation, today the fertilizer industry is controlled

by a handful of corporations whose position of market dominance over the three major

macronutrients (N-P-K) is deeply entrenched. These corporations are aggressively on the lookout

Evidence of illegal price-gouging in the fertilizer industry

Since the 1980s, weak antitrust enforcement has been justified by the “consumer welfare”

approach — an idea introduced by a group of Chicago School economists during the Reagan

administration. Traditionally, antitrust law was tasked with promoting competition and

preventing corporations from amassing enough political power to threaten democracy. Under

Reagan, the Department of Justice (DOJ) redesigned the scope of those laws to instead promote

efficiency.

14

United States Department of Justice, 1982 Merger Guidelines. Washington: US DOJ. 1982.

https://www.justice.gov/archives/atr/1982-merger-guidelines; Federal Trade Commission, The Evolution of U.S.

https://etcgroup.org/sites/www.etcgroup.org/files/files/etc_platetechtonics_a4_nov2019_web.pdf

12

ETC Group. 2019. “Plate Tech Tonics: Mapping Coorporate Power in Big Food.” Available at:

https://etcgroup.org/sites/www.etcgroup.org/files/files/etc_platetechtonics_a4_nov2019_web.pdf

11

ETC Group. 2019. “Plate Tech Tonics: Mapping Coorporate Power in Big Food.” Available at:

https://www.yara.com/corporate-releases/yara-secures-100-of-galvani-minority-interests-including-salitre-

phosphate-project/

Nickel, R. 2013. “Mosaic to buy CF’s phosphate business for $1.2 billion.” Reuters. Available at:

purpose of antitrust law would no longer be to promote competition through the maintenance of

open markets, but would instead increase and maintain our access to cheap goods.

15

And yet the high levels of consolidation seen in our fertilizer industry today have not led

to the promised lower prices. Instead, we have seen record price spikes that are not reflective of

earning from commodity crops. While fertilizer corporations claimed these prices were the result

of shortages and high natural gas prices, their own annual and quarterly reports refuted these

claims.

In 2021, and particularly in the last quarter of the calendar year, the price of all major

nutrients used in crop production — Nitrogen, Phosphorus, and Potassium (NPK) — skyrocketed

at record-breaking rates and levels. Compared to September 2020 prices, the main

nitrogen-based fertilizers — anhydrous ammonia, urea, or liquid nitrogen — increased 210%,

155%, and 159% respectively. Phosphorus-based fertilizers, Diammonium phosphate (DAP) and

(DAP, urea, anhydrous, UAN28, and UAN32) are at all-time record highs. Of the other three

leaving 10-34-0 as the only fertilizer not presently on track to break its own record.

19

Fertilizer corporations have blamed the war in Ukraine, global shortages, and rising costs

of production on these price increases; however, fertilizer companies’ own financial statements

indicate otherwise. As we have explained, fertilizer prices were rising at alarming rates far before

19

Quinn, R. 2022. “DTN Retail Fertilizer Trends.” Progressive Farmer. Available at:

https://www.dtnpf.com/agriculture/web/ag/crops/article/2022/04/13/fertilizers-look-set-price-records

18

Myers, S. and V. Nigh. 2021. “Too Many to Count: Factors Driving Fertilizer Prices Higher and Higher.” Farm

https://www.fb.org/market-intel/too-many-to-count-factors-driving-fertilizer-prices-higher-and-higher

17

Farm Action. (2021, December 8). Farm advocates call for doj-investigation into suspicious spike in fertilizer

https://farmaction.us/2021/12/08/farm-advocates-call-for-doj-investigation-into-suspicious-spike-in-fertilizer-prices/

Farm Action. (2021, December 8). Farm advocates call for doj-investigation into suspicious spike in fertilizer

https://www.grassley.senate.gov/news/news-releases/grassley-to-garland-investigation-needed-in-the-fertilizer-indus

try

15

Khan, Lina. 2012. “Obama’s game of chicken.” Washington Monthly. Available at:

https://washingtonmonthly.com/2012/11/09/obamas-game-of-chicken/

Merger Law, Debra Valentine. Washington: US FTC, 1996,

https://www.ftc.gov/public-statements/1996/08/evolution-us-merger-law

Russia invaded Ukraine. As noted, these price spikes were sufficiently suspicious to prompt both

Senator Grassley and Farm Action’s calls for the DOJ “to investigate concerns raised by

American farmers about possible anticompetitive activity and market manipulation in the

fertilizer industry.”

20

The Russian invasion of Ukraine has provided a convenient shield for

quarter report explicitly states that this has had “[l]imited impact on finished fertilizer production

to date.”

production levels to meet demand. Their 2020 report states that, “due to historically low global

ammonia prices we curtailed production…while maintaining flexibility to respond to

improvements in the market condition.”

increased potash production: “We responded to extremely tight global market fundamentals and

safely and efficiently increased our production by nearly 1 million tonnes [of potash]. We

ramped up production in a very short time showcasing the flexibility and superior asset quality of

are no capacity shortages — and yet farmers across the country are grappling with fertilizer price

Fertilizer corporations have also blamed increased production and operating costs on

rising fertilizer prices. While their costs may be up, the enormous gains in their gross operating

margins demonstrate that the rate of these price spikes is not justified by their increased

expenses. In 2021, Nutrien’s cost of goods sold did increase by 58% compared to 2020; however,

their gross manufacturing margin was up 669% from 2020.

CF Industries saw their gross

24

Nutrien. (2022, February 16). Nutrien Delivers Record Results and Expects Continued Growth in 2022 [Press

release]. Retrieve from

https://nutrien-prod-asset.s3.us-east-2.amazonaws.com/s3fs-public/uploads/2022-02/022-003%20-%20Nutrien%20

Delivers%20Record%20Results%20and%20Expects%20Continued%20Growth%20in%202022_0.pdf

23

Nutrien. 2021. “Annual Report 2021.” Available at:

Yara International ASA. 2021. “Yara International ASA 2021 Third quarter results.” Available at

https://www.yara.com/investor-relations/latest-quarterly-report/

20

Farm Action. (2021, December 8). Farm advocates call for doj-investigation into suspicious spike in fertilizer

prices [Press release]. Retrieved from

https://farmaction.us/2021/12/08/farm-advocates-call-for-doj-investigation-into-suspicious-spike-in-fertilizer-prices/

; Chuck Grassley. (2021, December 17). Grassley to Garland: Investigation needed in the fertilizer industry [Press

release]. Retrieved from

https://www.grassley.senate.gov/news/news-releases/grassley-to-garland-investigation-needed-in-the-fertilizer-indus

try

margin increase by 298% in 2021, though the cost of sales only accounted for 125% of that

increase.

25

Yara’s 2021 annual report admits that “increased price transparency can challenge

fertilizer premiums;” the authors go on to attribute the 76% increase in U.S. earnings before

interest, taxes, depreciation, and amortization (EBITDA) since last year to “high production

appear to be more closely aligned with the rising prices farmers are able to get for their grain

harvests. In fact, in 2018, Yara stated that “[v]ariations in grain prices (corn or wheat) explain

approximately 50% of the variations in the urea price, making grain prices one of the most

important factors driving fertilizer prices.”

The chart below of global grain and fertilizer prices

demonstrates just how closely tied these two trends are.

On average, corn prices rose more than 24% in 2021 and are up nearly 60% today

relative to January of 2021.

Wheat prices rose around 15% in 2021 and today are nearly double

what they were in the beginning of 2021.

maximum profit out of the supply chain, leaving the farmer with no hope of profitability.

29

“Wheat Prices - 40 Year Historical Chart.” Macrotrends. Available at:

https://www.macrotrends.net/2534/wheat-prices-historical-chart-data

https://www.macrotrends.net/2532/corn-prices-historical-chart-data

https://www.yara.com/siteassets/investors/057-reports-and-presentations/other/2018/fertilizer-industry-handbook-20

18 -with-notes.pdf/

26

Yara. 2021. Yara Integrated Report 2021: Growing a Nature-Positive Food Future.” Available at:

https://www.yara.com/siteassets/investors/057-reports-and-presentations/annual-reports/2021/yara-integrated-report-

2021.pdf/

Farmers robbed of their profits

When fertilizer companies use their positions of market dominance to collude and tie

prices to the commodity market, they not only rob the farmer of their profits but also of their

livelihoods. The farmer is simply unable to get ahead. Furthermore, rising fertilizer prices are

forcing farmers to make farm management decisions that are not in the best interest of their land,

their crop yields, the environment, or their communities — but instead are driven by the financial

restrictions imposed by such significant increases in expense.

As fertilizer prices spiked at the end of 2021 in concert with rising commodity prices,

several studies indicated these ballooning fertilizer prices would consume farmers’ profits and

predicted that net income would fall. The Agricultural and Food Policy Center (AFPC) at Texas

Hebebrand, C. and D. Laborde. 2022. “High fertilizer prices contribute to rising global food security concerns.”

International Food Policy Research Institute. Available at:

https://www.ifpri.org/blog/high-fertilizer-prices-contribute-rising-global-food-security-concerns

study ran two models, one at the predicted fertilizer rate and a second at adjusted rates of 55.43%

for Nitrogen and 50.84% for Potash and Phosphorus, based on the most recent fertilizer data at

the time. A comparison of the two scenarios resulted in substantial net farm income reductions

and significantly higher fertilizer expenses for farmers. Specifically, in feed corn farms, their

$12.00/bu of soybeans, which at the time was considered high, this meant a drop in farm income

from 2020 and 2021 levels. Prior to the global food shortage triggered by the war in Ukraine,

USDA long-term price predictions for corn and soy were $4.80/bu and $10.50/bu, respectively.

This study modeled that if those price predictions were accurate, then net farm income would

drop to $64,600 — a reduction of more than $20,000 from the 2013-2019 average of $85,000,

and nowhere near 2020 and 2021 income levels.

Farming is a risky business: no two years are the same and the combined effects of the

volatility of nature and global pricing has led us to spend billions of U.S. taxpayer dollars

government programs, but as they go up and fertilizer companies rob them of their profits, they

heavy debt-loads or invest in updated equipment, American farmers are forced to continue to

take on increasingly untenable levels of debt and source significant portions of their incomes

from government support programs. Farm debt-load has been steadily rising since 1991

2019, government payments made up approximately one fifth, at 20.6%, of all farmer income.

Smaller independent farms are further disadvantaged by the kinds of spikes in price we

are seeing today because they do not have access to the kind of capital industrial operations do.

Jansen, D. L. Liu, and A. Rettenmaier. 2021. “U.S. Farm Subsidies: A Prime Example of Crony Capitalism.”

Texas A&M University Private Enterprise Research Center. Available at:

https://perc.tamu.edu/PERC-Blog/PERC-Blog/U-S-Farm-Subsidies-A-Prime-Example-of-Crony-Capita

https://farmdocdaily.illinois.edu/2021/11/2022-grain-farm-income-projections-negatively-impacted-by-fertilizer-cost

ways that may have a series of detrimental effects, and then further miss out on the high grain

prices we are seeing today.

Forced into even tighter financial constraints, farmers are forced into four courses of

action: to plant less acreage, to reduce fertilizer applications, to adjust crop plans to favor less

could also lead to lower quality in existing yields — both of which will exacerbate rising food

prices and global food shortages.

If ever there was a time that we should be supporting our

farmers to maximize their yields and produce as much food as they can, it should be now.

Instead, fertilizer companies are forcing farmers to reduce the potential of their harvests before

they have even begun.

The third option — to adjust their crop plans so that they rely more heavily on crops that

have reduced fertility demands — has led to a record-high number of acres reportedly being

planted in soybean this year, which require less fertilizer than other commodity crops.

Higher

soybean in 2022. While this may help farmers manage their input expenses, the SCN Coalition

occur in fields infested with soybean cyst nematodes (SCN).

38

In normal years, economic losses

attributed to yield losses caused by SCN exceed $1 billion annually in the US.

Following

soybean with a non-host crop (such as corn or wheat) is one of the most effective ways to reduce

SCN populations, so increasing pressure on farmers to follow soy crops with consecutive soy

crops will likely have longer-lasting impacts, such as increased SCN population densities and

Grant, D. 2022. “Plan for record soy acres enhances SCN risk.” Farm Week. Available at:

https://www.farmweeknow.com/crop_conditions/plan-for-record-soy-acres-enhances-scn-risk/article_63a21aa0-bb6

3-11ec-b9ce-03ad052bd729.html

38

Grant, D. 2022. “Plan for record soy acres enhances SCN risk.” Farm Week. Available at:

https://www.farmweeknow.com/crop_conditions/plan-for-record-soy-acres-enhances-scn-risk/article_63a21aa0-bb6

American Agriculture Movement

American Grassfed Association

Farmworker Association of Florida

National Latino Farmers & Ranchers Trade Association

Oklahoma Black Historical Research Project, Inc.

Rural Coalition

Women Involved in Farm Economics