Federal Register :: Access to Fertilizer: Competition and Supply Chain Concerns



On July 9, 2021, President Biden issued an Executive Order titled “Promoting Competition in the American Economy,” which creates a White House Competition Council and directs Federal agency actions to enhance fairness and competition across America’s economy. The Executive Order directs the Council and member agencies to “identify and advance any additional administrative actions necessary” to promote competition on an ongoing basis. The Secretary of Agriculture (the Secretary) takes note of wide-ranging concern from agricultural producers regarding access to and pricing of fertilizer. This notice requests comments and information from the public to assist the U.S. Department of Agriculture (USDA) in identifying relevant difficulties, including competition concerns, and potential policy solutions for the fertilizer market.


Comments must be received by May 16, 2022.


All written comments in response to this notice should be posted online at www.regulations.gov. Comments received will be posted without change, including any personal information provided. All comments should reference the docket number AMS-AMS-22-0027, the date of submission, and the page number of this issue of the Federal Register . Comments may also be sent to Jaina Nian, Agricultural Marketing Service, USDA, Room 2055-S, STOP 0201, 1400 Independence Avenue SW, Washington, DC 20250-0201. Comments will be made available for public inspection at the above address during regular business hours or via the internet at www.regulations.gov.


Jaina Nian, Agricultural Marketing Service, at (202) 378-2541; or by email at jaina.nian@usda.gov.


I. Background

On July 9, 2021, President Biden issued Executive Order 14036, “Promoting Competition in the American Economy” (86 FR 36987) (E.O. 14036). E.O. 14036 focuses on the need for robust and open competition in the American economy to secure broad and sustained economic prosperity, promote the welfare of workers, farmers, small businesses, startups, and consumers, and prevent the threat that excessive market concentration poses to basic economic liberties and democratic accountability. With respect to agriculture, E.O. 14036 explains:

Farmers are squeezed between concentrated market power in the agricultural input industries—seed, fertilizer, feed, and equipment suppliers—and concentrated market power in the channels for selling agricultural products. As a result, farmers’ share of the value of their agricultural products has decreased, and poultry farmers, hog farmers, cattle ranchers, and other agricultural workers struggle to retain autonomy and to make sustainable returns.

Additionally, E.O. 14017 “America’s Supply Chains” (No. AMS-TM-21-0034) (86 FR 20652) (E.O. 14017) directs the Secretary to examine and address risks to supply chains.

As part of USDA’s broad and sustained focus on competition and supply chain resiliency, the Secretary takes note of wide-ranging concerns from agricultural producers regarding concentrated market power in the fertilizer industries. Farmers depend on nitrogen, phosphate, and potassium (potash) which are key nutrients in manufactured fertilizer. A handful of fertilizer companies control the channels through which farmers obtain these nutrients to raise a productive crop.[1] In turn, these crops may supply inputs for other agricultural production enterprises, like livestock.

Two companies supply the vast majority of fertilizer potash in North America.[2] Four companies supply 75 percent of U.S. nitrogen fertilizers.[3] These companies’ possession of scarce resources, often in other countries,[4] and control over critical production, transportation, and distribution channels raises heightened risks relating to concentration and competition.[5] 

Additionally, concentration in the fertilizer industry constrains farmers’ options for nutrients. In 1984, many small and medium-sized firms produced nitrogen fertilizer in quantities that met or exceeded domestic demand. However, as domestic industry

consolidated through mergers,[6] the number of U.S. firms declined from 46 to 13 firms between 1984 and 2008, a reduction of 72 percent.[7] Research and development (R&D) spending in the fertilizer industry has remained limited—around 0.21 to 0.25 percent of net sales.[8] Limited R&D is concerning given the concentration and depletion of elemental reserves, some located in politically unstable areas abroad.[9] 

Increasing concentration exposes farmers to a range of pricing-related risks. Fertilizers, especially nitrogen (N) nutrients, are already in the top three costs for farmers. Fertilizer costs may swing dramatically up because of individual or layered world events [10] such as strong global demand for agricultural commodities,[11] rising energy prices,[12] export restrictions by major global suppliers,[13] trade sanctions,[14] or war as with the recent Russian invasion of Ukraine.[15] Price volatilities may stem from a small number of firms controlling the few channels for production, transportation,[16] and distribution, which may give them the market power to, among other harms, raise costs for farmers. In 2021, for instance, the prices U.S. farmers paid for fertilizers increased over 60 percent. Nitrogen fertilizers prices increased 95 percent, and potash fertilizers increased over 70 percent. A recent study finds that feed grain farms in 2022 could face an increase of cost of $128,000 per farm due to higher fertilizer cost.[17] 

As part of executing our responsibilities under the E.O. 14036 and E.O. 14017, USDA seeks information to assist us in identifying and addressing competition-related challenges in the U.S. fertilizer market and other obstacles to producers accessing affordable, responsibly manufactured fertilizer.

We are further interested in comments as to how the matters raised may be relevant to promoting fair and competitive markets and local and regional food systems, creating new market opportunities (including for value-added agriculture and value-added products), advancing efforts to transform the food system, meeting the needs of the agricultural workforce, supporting and promoting consumers’ nutrition security, particularly for low-income populations, supporting the needs of small to mid-sized and underserved producers and processors, and advancing environmental stewardship.

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