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Corn farmers show further concern over nitrogen fertilizer tariffs following new study

A new study by Texas A&M University has raised more red flags for farmers concerning tariffs on nitrogen fertilizer.

Lead researcher Joe Outlaw says while many are blaming the increase in natural gas prices for increased fertilizer costs, their historical analysis shows the correlation between fertilizer costs and natural gas prices decoupled around 2010.

“We can put to bed the connection between natural gas and ammonia at this point.”

The study notes anhydrous ammonia increased by $688 per ton from the end of 2020 through October 2021. Farmers like Dee Vaughan of Texas fear proposed tariffs by major nitrogen producers like CF industries would create shortages and drive farmer’s costs up even higher.

Vaughan says there are now 4 major players that control 75% of the US nitrogen industry with CF Industries being the dominant player.

“From this study, it certainly appears the industry uses market power to set the price of nitrogen fertilizer. If a tariff is put in place, nitrogen will likely increase by an additional $102 per ton.”

National Corn Growers Association President Chris Edgington, a farmer from Iowa, is strongly requesting companies leave farmers out of their trade disputes.

“Nobody has been willing to drop their case.  We have had some preliminary discussion with Mosaic. CF has indicated they may be interested in talking with us, but none of them have shown any interest in asking that tariffs be paused, stopped, rescinded, eliminated or anything like that.”

Missouri farmer Jay Schutte says it is an issue that needs to be looked at very carefully.

“The two biggest limiting factors for corn yield are the amount of nitrogen we put on and the amount of rain we get. We certainly cannot control the rain, but we can control the nitrogen. The corn production cycle is going to be starting here very quickly and if we get tariffs put in, this could be very detrimental to all farmers out there.”

The study was funded by 21 state corn grower associations including Missouri, Illinois, Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Nebraska, Ohio, South Dakota, Tennessee, and Wisconsin.

Outlaw, Edgington, Vaughan and Schutte made their remarks during a webinar hosted by the National Corn Growers Association.