About the Duties Hurting Farmers
Farmers are facing high fertilizer prices and reduced supply.
How did it come to this?
In June 2020, the Mosaic Company, the second largest phosphate fertilizer producer in the world—and the dominant U.S. producer—filed petitions with the U.S. Department of Commerce (DOC) and International Trade Commission (USITC) for an investigation into—and imposition of countervailing duties (CVDs) on—phosphate fertilizer imports from Morocco and Russia. A much smaller U.S. producer supported Mosaic’s petition after it was filed.
In its filing, Mosaic claimed injury from price drops in 2019. The truth is that those price drops were caused by unpredictable shifts in supply and demand from historic flooding and weather events in late 2018 and the first half of 2019, which dramatically reduced planted acreage in 2019 and therefore reduced farmer demand for fertilizer.
The DOC made a final decision to impose duties of 19.97% on Moroccan phosphate fertilizers as of April 2021. It also imposed duties on Russian imports. Now, critical sources of imported supply are dramatically reduced. At the same time, after significant concentration of the phosphate fertilizer industry over the last 20 years, only four domestic producers remain and total domestic production has shrunk. Mosaic dominates, with 60% of U.S. production of phosphoric acid, the phosphorus component of fertilizers.
With China already excluded from the U.S. phosphate market by other U.S. tariffs, Saudi Arabia—which was not included in Mosaic’s petition—is the only other major source of volumes for import into the United States.
The resulting supply shocks have driven a surge in phosphate fertilizer prices at the farm gate.
Other smaller foreign producers have tried to pick up the slack, but they cannot meet the full need of the U.S. market. Meanwhile, despite their reassurances that U.S. farmers would have plentiful access to these vital nutrients, Mosaic continues to export a substantial portion of its own output—nearly half in 2021 and more than half in 2020 by most estimates. At the same time, Mosaic’s own production output was reduced in the last year by severe weather events in the Gulf of Mexico and technical issues at Mosaic’s production facilities, demonstrating further the critical need for flexible and reliable supplies of imports to support U.S. farmers.
OCP is appealing the DOC and USITC decisions based on the strong belief that duties were imposed based on incomplete and inaccurate information, faulty arguments, misapplication of the law and a misreading of the dynamics of fertilizer trade in the United States.
OCP is grateful to have the support of those who represent American farmers — producer groups, retailers, members of Congress and others — groups that have strongly and publicly opposed these damaging and unjustified duties. The joint amicus brief from the American Soybean Association, the National Corn Growers Association, the National Cotton Council of America, the National Sorghum Producers and the Agricultural Retailers Association shows just how much American agriculture has been injured by these duties, and the deep flaws in the arguments that led to them.
A reversal of those duties will bring relief from the supply shocks that are hurting the pocketbooks of farmers across the United States.