Russia is weaponizing fertilizer

The country wants to re-structure the world order through food supply.

 

Mike Wilson, Farm Futures 

Sep 14, 2022

 

The big challenge in 2023 crop budgets? No surprise – it’s fertilizer, or 36% of variable corn costs, according to USDA. From October 2020 to Oct. 2021 anhydrous prices nearly doubled and will remain stubbornly high for the near term. According to a June 2022 Iowa State study, fertilizer prices are two to four times higher now than in 2020.

 

But, why?

 

It’s easy to point a finger at the Russia-Ukraine conflict as the source of this pain, but unchecked consolidation that reshaped the fertilizer industry into an oligopoly began long before the guns began blazing last February. Half of UAN produced in the United States comes from CF Industries. Mosaic produces some 75% of U.S. phosphorus and last year successfully got the Department of Commerce to place countervailing duties on two of its major competitors, Russia and OCP Morocco. Meanwhile, four companies – CF Industries, Nutrien, Koch and Yara-USA – make and sell 75% of nitrogen-based fertilizers in this country.

 

Industry consolidation began soon after ag’s golden era began to wane some eight years ago. Fertilizer companies saw crop prices drop and began to trim costs; to survive, they merged and grew. This happened right in front of our eyes. The antitrust folks in Washington, D.C. did not weigh in. We see unprecedented concentration in not only fertilizer but also soybean processing, beef processing and pork processing. 

 

“Don’t expect DOJ (Department of Justice) to come break up the fertilizer companies,” says Josh Linville, vice president-fertilizer for StoneX. “There’s a lot of other industries they will look at before they get around to fertilizer concentration.”

 

It doesn’t hurt if you can eliminate your competitors. In 2020 DAP (Diammonium Phosphate) had dropped to $250 a ton before Mosaic called for the countervailing duty on Russia and Morocco. Today the DAP retail price is nearly triple that. But that higher price also reflects an increasing difficulty Mosaic faces in extracting phosphate rock from the ground. So a ton of DAP that cost $750 per ton retail probably costs the company $575 per ton to produce, says Linville.

 

“It’s not gouging,” he points out. “They are one of the highest cost phosphate producers in the world. They’re going to do everything they can to survive.”

 

A world of haves and have-nots ...

 

more, including links, chart

https://www.farmprogress.com/commentary/russia-weaponizing-fertilizer