Ohio corn growers push for answers on fertilizer prices

By Ty Higgins, Ohio Ag Net

Fertilizer prices have become one of the biggest concerns facing farmers as commodity prices put pressure on farm margins, raising questions about competition, market concentration and the factors driving the cost of crop nutrients.

Ohio Corn and Wheat is among the agricultural organizations calling for greater competition and transparency in the fertilizer market. The Federal Trade Commission (FTC) has now taken an interest in those concerns, asking farmers, retailers and others in the fertilizer supply chain to provide information that could help with its investigation.

“I don’t think you can put two farmers together without the topic coming up of how input costs have gone, and they start to list inputs at fertilizer because it’s just been unexplainable, what’s going on,” said Ohio Corn and Wheat Executive Director Tadd Nicholson.

The concerns, he said, are not new. Fertilizer prices and availability have been an issue for several years, prompting Ohio Corn and Wheat and other organizations across the Midwest to take a closer look.

Market concentration is at the heart of many of those questions. Nicholson said the fertilizer industry has become increasingly consolidated, leaving farmers with relatively few options when purchasing critical inputs.

“I don’t know what the definition of too concentrated is, but I’m pretty sure when one company controls about 80% of the market, that’s going to be veering toward too concentrated,” Nicholson said. “Somehow the industry has been merged and consolidated to a point where there’s just no competition out there, and that leads to funny things happening in price. It’s anything but market fundamentals that set the fertilizer price today.”

Clinton County farmer and Ohio Corn and Wheat board member John Settlemyre has experienced those market concerns firsthand. His own investigation into fertilizer availability began in the spring of 2023 when he encountered a supply problem with fertilizer he had already contracted to purchase.

“We got about halfway through the application, and they said they’d run out of phosphate, but they wanted to switch it over to MAP,” Settlemyre said. “And I said, I’m fine with that as long as the price per unit of phosphate is the same.”

Instead, the cooperative wanted to charge the same price per ton despite the different phosphate concentration.

“So you’re going from a 52% phosphate concentration down to 40%, which, you know, that’s a significant increase in my cost,” Settlemyre said. “I checked with two other vendors and all three of them had run out in the same week, so I started to ask some questions.”

That experience led Settlemyre to question whether farmers were truly dealing with multiple independent suppliers.

“Even though you think you’ve got three different vendors, you’ve got one person in the back room controlling everything,” he said.

Settlemyre brought his concerns to Nicholson, and the two began comparing notes with agricultural organizations in other states and found very similar regional issues with their supply chains.

Settlemyre also looked beyond the United States to compare fertilizer prices with those paid by farmers in other countries. He said U.S. producers have, at times, paid a significant premium compared with producers in other parts of the world.

Prior to recent disruptions involving the Strait of Hormuz, Settlemyre said American producers were commonly paying a premium equivalent to countervailing duties of about 17% compared with some foreign competitors.

For farmers already dealing with challenging commodity prices, those additional costs can have a significant impact on the bottom line.

Clark County farmer and Ohio Corn and Wheat board member Scott Haerr said fertilizer’s share of the farm budget has grown considerably in recent years.

“Well, it’s ugly. It’s what it is,” Haerr said. “We went through the pandemic, inflation, everything inflated, including labor, insurance, land, machinery, which are all big, big hits. And a lot of things came back down. But fertilizer stayed up.”

Haerr also questioned the relationship between nitrogen fertilizer prices and the cost of natural gas, which is a key input in nitrogen fertilizer production.

“Several years ago, nitrogen fertilizer always used to follow the price of natural gas,” Haerr said. “It’s derived from natural gas. We make ammonia from there. We make our competitive products in nitrogen, but it’s something disconnected anymore. It seems awful fishy when the underlying cost of producing a product no longer affects the price of the product.”

For farmers, however, reducing fertilizer applications is not a simple solution. Haerr said producers have already become highly efficient with their nutrient use and are generally applying fertilizer based on crop needs, soil tests and environmental considerations.

“You can shift a little bit from here to there. You can maybe forego some fertilizer for a year,” Haerr said. “But when you’re working with the soil bank, you can’t do that for a long time without negatively impacting your production capability.”

That is why the Ohio Corn and Wheat leaders believe the FTC investigation is important.

“Anybody that has information to help our investigation be successful, come forward,” Nicholson said. “It’s time to do that.”

He acknowledged that some people may be hesitant to share information because of their business relationships with fertilizer manufacturers.

“If you’re a retailer, and you have a precious few people that you could call to buy your supply of fertilizer, you don’t want to upset those people,” Nicholson said.

The FTC has established a way for people to provide information confidentially, which should help address some of those concerns.

Nicholson said there are no simple solutions to what he described as a “wicked problem,” but he believes getting federal regulators to examine the issue is an important first step.

“This is not something to be done overnight,” Nicholson said. “But if we don’t ask these questions and don’t cause somebody to take a look at this, our kids are going to be dealing with this. Our grandkids are going to be dealing with this same issue of concentration.”

For farmers and others with information they believe could help the investigation, Nicholson encouraged them to make their voices heard. Information can be submitted confidentially to the FTC at fertilizercomplaints@ftc.gov. Farmers and others in the supply chain can also contact Ohio Corn and Wheat for assistance in connecting with FTC investigators.

As fertilizer remains one of the largest and most closely watched expenses on the farm, Nicholson, Settlemyre and Haerr said they believe greater transparency and competition are necessary to ensure farmers can remain competitive in a global commodity market.

“The federal government wants to help, but they need that advice,” Nicholson said. “Anybody who would like to discuss that question, to give us an idea, we are all ears.”