The US Senate Committee on Agriculture Nutrition and Forestry held a hearing last week to determine solutions to strengthen the fertilizer supply chain and to address agricultural input affordability. Witnesses that provided testimony for the hearing included Andy Green with Center Market Strategies, Trent Kubik with South Dakota Corn Growers, Eddie Melton with Kentucky Farm Bureau Federation, Corey Rosenbusch with The Fertilizer Institute and Joshua Westling with J. Westling & Co. LLC.
“Farmers are suffering from concentration bottlenecks across the sectors that serve them. Whether it’s high prices and few choices for farm equipment or seeds, or limited choices and low prices for markets they sell into, farmers big and small are acutely aware of how a forty-year trend towards concentration and the maximization of short-term efficiency targets leaves them increasingly powerless. In commodity markets where margins are thin and additional revenue streams are less available today than even a few years ago, bringing the next generation back to the farm is harder and harder to pencil out, an economic impact which reverberates across rural America,” said Green.
“Vertical integration has not led to efficiency gains passed on to growers and consumers. Instead, our experience is that this integration has resulted in the largest fertilizer companies locking up and leveraging distribution channels, entrenching their dominant position, and extracting excessive, supra-competitive profits from farmers and consumers. Prices have not yet decreased from their most recent run-up in this concentrated market. With time, it may become apparent again that these integrated companies in highly concentrated markets have successfully insulated themselves from market shock at the expense of farmers and consumers,” said Kubik.
“One point that must be clearly understood is that today’s fertilizer price challenges did not begin with the recent conflict in Iran. While global tensions often draw attention to input markets, prices for inputs like fertilizer and fuel have been elevated for several years. USDA forecasts that production expenses will reach a record $478 billion in 2026, and that was before the surge in fuel and fertilizer prices. The current situation is not a temporary disruption, it is the continuation of a longer trend that has steadily increased the cost of doing business in agriculture,” said Melton.
“The key thing to take away from this testimony is that the U.S. fertilizer industry supports market transparency. As an example of this ongoing support, TFI Stats offers members and subscribers access to historical aggregated datasets and insights, helping users understand the fertilizer industry; for more information, visit the TFI Stats web page. Similarly, TFI seeks to establish a federal means of accessing, aggregating, and reporting data on fertilizer industry trends to aid farmers, policymakers, and the public on a timely and consistent basis. Importantly, that analysis must be global in scope. As the ongoing events in the Middle East make clear, disruptions to the global market directly impact American farmers. We believe that establishing this function would aid farmers in their planning and budgeting, while serving as an impartial resource for Congress and the public. For several years, the U.S. fertilizer industry has pushed legislatively in both chambers and administratively at the U.S. Department of Agriculture (USDA) for the establishment of an economist position within the USDA’s Office of the Chief Economist. The position will study and report on crop inputs, particularly fertilizer, across the complex global market in which these inputs are produced, traded, and applied,” said Rosenbusch.
Westling cited some elements that would be helpful to addressing the cost of fertilizer in the U.S. including “Predictability of federal capital deployment timelines, congressional legislation that moves the needle, recognition of the distinction between supporting incumbents and expanding capacity and continued federal support for the broader project ecosystem.”
Audio Reporting by Dale Sandlin for Southeast AgNet.