 |
| Price of Plenty graph by Rebecca Bauer, from Bloomberg data |
"Farmers and others who rely on fertilizer have no choice but to spend more," Zahn writes. "Although fertilizer prices have fallen from their all-time high in March 2022, when they spiked up to 3.5 times higher than two years before, the commodity is likely to remain costly for some time, continuing to squeeze the food production system."
The industry's earning increases are "eye-popping," Zahn writes. "Canada-based Nutrien Ltd., the world's leading producer of potash fertilizer, saw profits increase 1,575% between 2020 and 2022 to $7.7 billion. Tampa-based The Mosaic Co., one of the largest U.S. producers of potash and phosphate fertilizer, made $3.6 billion in net earnings in 2022, a 438% increase from 2020. CF Industries, an Illinois-based fertilizer company, made $3.2 billion in 2022, a 955% increase from 2020. . . . When asked for comment, Mosaic said in an email that the fertilizer business is cyclical and thus has volatility in prices." The others didn't reply before publication.
Causes of the price spike include the pandemic-hampered supply chain, labor disruptions, natural disasters that upsett production, fewer phosphate imports from China, and the war in Ukraine, Zahn explains. Chad Hart, an agricultural economist at Iowa State University, told him: "It was literally a whole menu of things that were seemingly going in the wrong direction if you were looking to obtain fertilizer." Zahn reports, "Several of these factors are referenced in a study Hart co-authored that was hailed by The Fertilizer Institute for providing 'the best analysis data will allow to date.'. . . The study omits a large factor of the price increase: market power as a result of consolidation."
Are fertilizer giants able to fix the market? Joe Maxwell, co-founder of Farm Action, a Missouri-based nonprofit that advocates for competitive food and agriculture systems, "believes consolidation in the fertilizer industry has led to market manipulation," Zahn reports. "Since 1980, the number of fertilizer firms in the United States has fallen from 46 to 13. In 2019, just four corporations represented 75% of total domestic fertilizer production: CF Industries, Nutrien, Koch, and Yara-USA, Farm Action says. And just two companies supply 85% of the North American potash market: Nutrien and Mosaic, says the Federal Trade Commission. Maxwell told Zahn: "These companies took advantage of their dominant position in a marketplace and increased commodity price to the farmers in an effort to price gouge and extract all the wealth that they could from that supply chain at the very roots: fertilizer."
Increased fertilizer prices can hurt local and global communities, and a solution seems elusive. "While record fertilizer prices have translated to record profits for the fertilizer industry, small farmers, business owners and rural communities struggle to pay bills," Zahn writes. Higher costs also affect global food supplies. "Global experts also worry about how the high cost of fertilizer affects rising food prices and growing global food insecurity. . . . John Baffes, a senior agriculture economist for the World Bank, said that fertilizer is an important input to food commodity production, especially in less-developed countries. . . . It will be hard to lessen dependence on fertilizer anytime soon." Baffes told Zahn: "It's essential for supporting the world's population. If we did not have fertilizers, the earth's population would not be 8 billion; it would be 4 billion."
The industry's earning increases are "eye-popping," Zahn writes. "Canada-based Nutrien Ltd., the world's leading producer of potash fertilizer, saw profits increase 1,575% between 2020 and 2022 to $7.7 billion. Tampa-based The Mosaic Co., one of the largest U.S. producers of potash and phosphate fertilizer, made $3.6 billion in net earnings in 2022, a 438% increase from 2020. CF Industries, an Illinois-based fertilizer company, made $3.2 billion in 2022, a 955% increase from 2020. . . . When asked for comment, Mosaic said in an email that the fertilizer business is cyclical and thus has volatility in prices." The others didn't reply before publication.
Causes of the price spike include the pandemic-hampered supply chain, labor disruptions, natural disasters that upsett production, fewer phosphate imports from China, and the war in Ukraine, Zahn explains. Chad Hart, an agricultural economist at Iowa State University, told him: "It was literally a whole menu of things that were seemingly going in the wrong direction if you were looking to obtain fertilizer." Zahn reports, "Several of these factors are referenced in a study Hart co-authored that was hailed by The Fertilizer Institute for providing 'the best analysis data will allow to date.'. . . The study omits a large factor of the price increase: market power as a result of consolidation."
Are fertilizer giants able to fix the market? Joe Maxwell, co-founder of Farm Action, a Missouri-based nonprofit that advocates for competitive food and agriculture systems, "believes consolidation in the fertilizer industry has led to market manipulation," Zahn reports. "Since 1980, the number of fertilizer firms in the United States has fallen from 46 to 13. In 2019, just four corporations represented 75% of total domestic fertilizer production: CF Industries, Nutrien, Koch, and Yara-USA, Farm Action says. And just two companies supply 85% of the North American potash market: Nutrien and Mosaic, says the Federal Trade Commission. Maxwell told Zahn: "These companies took advantage of their dominant position in a marketplace and increased commodity price to the farmers in an effort to price gouge and extract all the wealth that they could from that supply chain at the very roots: fertilizer."
Increased fertilizer prices can hurt local and global communities, and a solution seems elusive. "While record fertilizer prices have translated to record profits for the fertilizer industry, small farmers, business owners and rural communities struggle to pay bills," Zahn writes. Higher costs also affect global food supplies. "Global experts also worry about how the high cost of fertilizer affects rising food prices and growing global food insecurity. . . . John Baffes, a senior agriculture economist for the World Bank, said that fertilizer is an important input to food commodity production, especially in less-developed countries. . . . It will be hard to lessen dependence on fertilizer anytime soon." Baffes told Zahn: "It's essential for supporting the world's population. If we did not have fertilizers, the earth's population would not be 8 billion; it would be 4 billion."
No comments:
Post a Comment