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Lankford, Colleagues Work to Lower Costs of Fertilizer for US Farmers

WASHINGTON, DCSenators James Lankford (R-OK) and Jerry Moran (R-KS) along with Representatives Tracey Mann (R-KS) and Cindy Axne (R-IA) led 82 of their colleagues in sending a letter to the US International Trade Commission (ITC) requesting it address the strain on the fertilizer supply by eliminating duties on phosphate fertilizer products imported from Morocco, and suspending the process to impose new duties on urea ammonium fertilizer from Trinidad and Tobago.

In the letter, the members stated that “Currently, in a time of tight global supply and demand for corn, soybeans, wheat, and other commodities, planting decisions are increasingly being made not on market fundamentals but rather on the cost of production driven by the price and supply of fertilizer. Again, we urge you to reconsider the duties placed on phosphate fertilizer products imported from Morocco and suspend the preliminary duties on UAN products from Trinidad and Tobago.”

The members write that eliminating these duties on fertilizer imports provides the most immediate opportunity for a near-term, partial remedy to the high costs of fertilizer facing US farmers before the end of the 2022 planting season.

The full text of the letter is HERE and below:

Dear Chair Kearns:

We write to express our concern regarding the supply situation for fertilizers in the United States. Specifically, we urge you to reconsider the duties placed on phosphate fertilizer products imported from Morocco and suspend the current process to impose new duties on urea ammonium nitrate fertilizer from Trinidad and Tobago.

The conditions surrounding on-farm expenses in the United States have dramatically changed since the US International Trade Commission’s (ITC) determinations in the countervailing duty investigation of phosphate fertilizers from Morocco and the antidumping duty investigation of urea ammonium nitrate (UAN) fertilizers from Trinidad and Tobago. The US Department of Agriculture (USDA) recently forecasted that farm production expenses will increase by 6.6% from 2021 in 2022. Several factors have led to these increased expenses – China’s curtailed fertilizer exports; a congested supply chain; increased demand; severe weather; the COVID-19 Pandemic; and general inflationary pressures. Additionally, farmers are seeing fertilizer prices four to five times higher than this time last year. 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.

The duties on phosphate fertilizer products imported from Morocco should be reconsidered. Imports currently supply about one-third of all domestic phosphate fertilizer, and Morocco has been a long-time supplier to US farmers. Currently, only about 35% of the world’s traded supply of phosphate fertilizer is not subject to duties for import into the US. This has unnecessarily restricted supply and added costs. Historically, phosphate fertilizer accounts for 15% of total cash costs for producers. Since the U.S. Department of Commerce’s decision to impose duties on phosphate fertilizer imports from Morocco, phosphate fertilizer prices have increased 93%.

The preliminary determination to impose duties on UAN imports from Trinidad and Tobago should be suspended, as should the collection of cash deposits on these duties. Since the U.S. Department of Commerce initiated the process of imposing duties on UAN imports from Trinidad and Tobago, import volume of UAN fertilizers have decreased 97%. Because there is a degree of substitution among nitrogen fertilizer, the impact of the tariffs on UAN is felt across all nitrogen products. Recent predictive modeling studies based on various factors like market fundamentals and inflation indicate that ammonia prices should be around $1,000 per ton.13 The actual price, however, has exceeded $1,500 per ton. At the end of February, all fertilizer prices were near record high levels.

Eliminating these duties on fertilizer imports provides the most immediate opportunity for a near term, partial remedy to the high costs of fertilizer facing US farmers before the end of the 2022 planting season. Currently, in a time of tight global supply and demand for corn, soybeans, wheat, and other commodities, planting decisions are increasingly being made not on market fundamentals but rather on the cost of production driven by the price and supply of fertilizer. Again, we urge you to reconsider the duties placed on phosphate fertilizer products imported from Morocco and suspend the preliminary duties on UAN products from Trinidad and Tobago.

Sincerely,

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