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USDA warns fertilizer firms on price gouging over Ukraine

Vilsack said it's "too early" to assess impact to agricultural markets and warned fertilizer companies against unjustified price increases.

Bloomberg, Content provider

February 26, 2022

2 Min Read
fotokostic/iStock/Getty Images Plus

By Mike Dorning

U.S. Agriculture Secretary Tom Vilsack warned fertilizer companies and other farm suppliers against taking “unfair advantage” of the Ukraine conflict and said his department would be watching for unjustified price increases.

Fertilizers are in focus because higher costs of production for farmers have contributed to rising food prices. The Agriculture Department will make sure companies “don’t use this situation as an excuse for doing something that isn’t necessarily justified by supply and demand,” Vilsack told reporters Thursday. “That’s my biggest and deepest concern, and we’re obviously going to continue to keep an eye on that.”

Inflation is among the top domestic concerns of the Biden administration as January’s 7.5% annual increase in the consumer price index hit a four-decade high. The Ukraine conflict is driving up oil prices that will likely soon translate into higher gasoline prices for consumers. The country, known as the ‘breadbasket’ of Europe, is also a major exporter of wheat.

Shares of major nitrogen-fertilizer producer CF Industries Holdings Inc. surged to a record high Thursday as Russia’s attack on Ukraine threatens to disrupt global supplies of the crop nutrient. Russia was the world’s largest exporter of nitrogen products in 2021, Green Markets analyst Alexis Maxwell said in a Bloomberg Intelligence report.

The White House has argued that companies in some highly concentrated industries such as meatpacking have exploited their market power to raise prices more than is justified.

Vilsack said that while it’s “too early” to assess the impact of the conflict on global agricultural markets, he doesn’t expect the crisis to add to food inflation for U.S. consumers.

“It’s too early to talk about Ukraine as it relates to Europe, but I think from a U.S. perspective I don’t foresee a circumstance where American consumers on the food side are necessarily going to see the kind of impact and effect the European consumers are going to see,” he said.

© 2022 Bloomberg L.P.

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