OMAHA (DTN) -- Countervailing duties (CVD) on phosphorus fertilizer imports have taken billions of dollars out of the U.S. farm economy during the last four years, according to a recent Texas A&M study. This comes at a time when U.S. crop producers struggle to remain profitable.

Commodity organizations are actively trying to get the duties removed. Earlier this week eight national commodity groups and more than 50 state affiliates sent a letter to the International Trade Commission pressing on the commission to revoke duties against phosphate fertilizer from Morocco.

"Allowing the CVDs to continue will further worsen the dire economic conditions faced by American farmers," the commodity groups wrote.

Other issues such as the lack of competition among input providers -- especially with fertilizer -- are also on farmers' minds, according to speakers at a recent webinar.

CVD INCREASED PHOSPHORUS FERTILIZER PRICES

In a recent Agri-Pulse webinar titled "How Phosphate CVDs Squeeze U.S. Farmers & Threaten Food Security," several speakers discussed the issue of CVD on phosphorus fertilizer imports. Several issues have led to higher input costs for U.S. crop producers during the last five years.

Bart Fischer, Texas A&M University AgriLife assistant professor and co-director of the Agricultural and Food Policy Center (AFPC), said input costs in crop production have risen 35% to 40% during the last five to six years. While commodity prices have increased some in recent months, producers are still facing increasing pressure from rising input costs.

Texas A&M was asked to study the effects CVDs have had on the cost of phosphorus fertilizer by Rep. Pat Fallon (R-Texas). The results of the study showed CVDs have increased the cost of phosphorus fertilizer for U.S. producers by an estimated $6.9 billion beginning in the 2021 growing season through the 2025 growing season.

Fischer said, broke down further, corn production alone accounted for $3 billion of the total $6.9 billion. That is 44% of the total CVD costs affecting U.S. corn producers, he said.

"Because of the pressure facing producers, they are particularly sensitive to anything that raises costs," Fischer said. "The CVD on phosphorus imports from Morocco comes at a time when farmers can ill afford it."

Fischer said the input costs versus grain price ratio is at its widest point in the last 30 years. Producers are seeing higher costs affect their bottom lines.

Most growers have "grown weary" of government aid in recent years. They don't want handouts, but they do want markets that work in the global economy, he said.

"A growing concern I hear a lot is the ad hoc assistance comes at the end of the year, and it just flows right into (paying for) input costs," Fischer said.

FARMERS HAVE TOO MUCH TRANSPARENCY?

Dee Vaughan, a fifth generation Texas Panhandle farmer and former president of the National Corn Grower Association (NGCA), also spoke in the webinar. He believes farmers suffer from having too much transparency in their business and a lack of competition in the input market.

Companies that supply farmers with their inputs know how much farmers are paying for inputs, how much they are receiving for their crops and generally how well their crops yield. They know how much it costs to produce an acre of grain, almost down the penny, he said.

"Are we doing more harm than good with these (government) payments?" Vaughan asked. "It is very discouraging as it seems like input costs rise and take away all of the benefit."

Vaughan has farmed for 40 years and when he began his career there were many companies producing seeds, chemicals and fertilizers. Mergers have greatly reduced the number of companies producing these and other inputs.

Today there is just one company each that controls phosphorus and potash capacity in this country, he said. There are four companies that control the nitrogen fertilizer capacity, but just one of the companies has more market share than the other three companies combined.

"Economists will tell you with this concentration they have the ability to use market power to set their prices," he said.

AG GROUPS PUSH TO REMOVE CVD ON P FERTILIZER

Vaughan was in Washington, D.C., at the time of the webinar. He was there with the Texas Corn Producers Association discussing agricultural issues with policy makers. CVD is high on their list to talk about with lawmakers, he said.

A sunset review period is coming soon with the phosphorus CVD and he is hopeful it can be eliminated. A notice was published in the Federal Register and the companies who pushed for the CVD had the month of March to respond to this notice, he said.

If no companies respond, the CVD will go into an expedited review period, and it would likely go away quickly. If the companies do respond, then this process would be much slower and it could take up to a full year, he said.

Vaughan said he believes at least one of the companies will respond and thus it will take a year to play out.

Organizations will have the chance to send comments to the Department of Commerce and the U.S. International Trade Commission (ITC). Commodity organizations also will submit their comments, he said.

Still, as the National Corn Growers Association noted this week, the ITC's sunset review could take a year to complete.

Mosaic, Nutrien and Simplot petitioned to have this CVD added because they felt they were being harmed by Moroccan phosphorus fertilizer imports. Agriculture companies in the past used this process to protect themselves. Farm groups have called on Mosaic and Simplot to rescind their petition, but that has not happened.

Vaughan said these companies are not part of President Donald Trump's tariffs agenda, which is about holding trading partners accountable. These are two different situations, he said.

Russ Quinn can be reached at Russ.Quinn@dtn.com

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