Lawmakers queried witnesses on U.S. fertilizer industry concentration in a Senate Ag Committee hearing.
Senate Majority Leader John Thune asked about the competitive landscape among producers. 
‘Simply put, farmers need more competition in this marketplace,’ a South Dakota farmer told the panel.

Fertilizer market concentration and the need to ramp up domestic production of crop nutrients took center stage at a Senate Agriculture Committee hearing Tuesday. 

Senate Majority Leader John Thune, R-S.D., made an appearance at the hearing focused on how to ensure fertilizer stability and affordability for America’s ag producers. 

In an exchange with The Fertilizer Institute’s CEO, Corey Rosenbusch, Thune zeroed in on the U.S. competitive landscape. 

“As we know, there are a small number of manufacturers who have the lion’s share of domestic fertilizer production. … In the United States, what percentage of sales for potash, nitrogen, and phosphorus, respectively, to U.S. retailers come from manufacturers other than the largest companies?” Thune asked. 

Rosenbusch responded by stressing the global nature of the fertilizer market.

“When you think about the total market for the U.S.,  it’s not just domestic-produced product but it’s also imported product that we need to serve to all the farmers’ needs,” he said.

He said the U.S. only produces about 2% of the potash needed. (Most of the rest come from Canada.) Rosenbusch said in the ammonia market, about 18 different companies make up about 80% of domestic output. Sixty percent of U.S. phosphate is made domestically and the other 40% is imported, according to the trade group CEO.  

In the bigger picture, the U.S. accounts for just 7% of total worldwide fertilizer production, making the country a net importer, Rosenbusch said. 

Rosenbusch stressed that his organization, the leading U.S. fertilizer lobby, supports calls for greater transparency of the market.

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Amid criticism of extreme volatility in the fertilizer industry, especially over the last five years, Rosenbusch emphasized the market’s global aspect. “Fertilizer is a globally traded commodity that is subject to fierce competition and global supply and demand.” 

Disruption due to war in the Middle East, for example, damaged or slowed 31 ammonia plants, while 49 plants in South Asia were shuttered due to disruption of natural gas supplies out of the Middle East, he said. 

“So even with the Strait [of Hormuz] reopening, we do not know the extent of the damage to those production facilities,” he said. “These issues really just exacerbated what was already a very tight global supply.” 

Also throwing the market into wild price swings are restricted exports from China, the world’s biggest fertilizer producer, plant damage in Russia and overall strong demand for crop nutrients, Rosenbusch said. 

Senate Ag Chairman John Boozman, R-Ark., noted that proposals to make the U.S. fertilizer industry more resilient may boost production and bring down prices in the long term. More immediately, Congress must provide additional financial aid to American farmers to help them get through the current year. 

Minnesota Sen. Amy Klobuchar, the committee’s top Democrat, said farmers need policies that encourage new investment, reduce supply disruptions and improve transparency in the fertilizer market.

Andy Green, principal and senior adviser at Center Market Strategies, a bipartisan group focused on combating business monopolies, criticized the government’s tolerance for a highly concentrated fertilizer market. 

High sustained increases in profits should “be cause for antitrust scrutiny in light of market shocks that are repeating today,” he said, adding that the government might want to reconsider recent mergers in the sector. 

Trent Kubik, a farmer and president of the South Dakota Corn Growers Association, questioned what’s causing higher prices of nitrogen in the U.S. despite the relatively low cost of natural gas, a critical fertilizer input and feedstock. 

“Market power has allowed manufacturers to maintain higher prices at the expense of the U.S. farmer,” he said. “Simply put, farmers need more competition in this marketplace.” 

Nebraska entrepreneur Joshua Westling, who is leading the development of a domestic fertilizer facility called Project Meadowlark in Nebraska that represents more than $1 billion in project investment, urged lawmakers to do more to increase fertilizer supplies in the U.S.

“Congress needs to take bold action,” he said in prepared testimony. “To do that, we need a clear federal commitment to invest in our nation’s fertilizer production infrastructure, which will signal to the private market that these billion-dollar-plus projects are worth investing in because they are critical to our national security.”

Westling also called for predictable trade policy on fertilizer inputs.

“Significant trade policy volatility on fertilizer inputs creates underwriting challenges for new projects,” he said. “I would respectfully suggest that any legislative consideration of trade policy on fertilizer take into account the impact on projects in development as well as projects in operation.”