June 24, 2022
The U.S. Department of Commerce issued a final determination stating that urea ammonium nitrate fertilizer exported to the U.S. was subsidized and sold at less than normal value in the U.S. market during its period of investigation. The investigation came after CF Industries filed a petition with the International Trade Commission in late 2021, requesting that the commission place tariffs on UAN, which is used in liquid fertilizers imported from Russia and Trinidad and Tobago.
Commerce found that imports from Russia are dumped (i.e., sold at less than fair value) at rates ranging from 8.16% to 122.93%, and unfairly subsidized at rates ranging from 6.27% to 9.66%. In addition, Commerce found that imports from Trinidad are dumped at a rate of 111.71% and unfairly subsidized at a rate of 1.83%.
ITC, an independent government agency, is conducting a separate investigation to determine whether imports of UAN from Russia and Trinidad materially injure, or threaten material injury to, the U.S. UAN industry. The ITC made an affirmative preliminary determination in August 2021 and is scheduled to make its final determination on July 18, 2022. If the ITC’s final determination is affirmative, then Commerce will issue AD/CVD orders, which will remain in place for at least five years.
While an important step in the process, the ruling will not on its own lead to the placement of duties on nitrogen fertilizers shipped into the country, the National Corn Growers Association states. The final stage in the process is expected later this summer when the ITC makes a final ruling on the matter.
“Today’s final determinations by the U.S. Department of Commerce represent an impartial application of U.S. law designed to ensure a level playing field for American industries competing against the unfair trade practices from state-subsidized entities underpinning UAN imports from both Russia and Trinidad for many years,” says Tony Will, president and chief executive officer, CF Industries Holdings, Inc. “These unfair trade practices have been thoroughly documented by U.S. government professionals during the process leading to today’s announcement.”
Will adds, “We believe this is an important step in the enforcement of longstanding U.S. trade rules to promote fair competition and in supporting a sustainable and reliable domestic UAN industry to serve American farmers.”
NCGA was among many who testified during the recent hearing held by ITC, telling commissioners that tariffs on nitrogen fertilizers will place an undue burden on farmers by creating additional fertilizer shortages and unwarranted price hikes.
“Placing tariffs on nitrogen fertilizers will land yet another blow to farmers, who are already dealing with a host of issues,” said Brooke S. Appleton, vice president of public policy at the National Corn Growers Association. “Farming is hard enough in the current environment. Farmers can’t do what they do with one hand tied behind their backs. And actions like these, pushed by fertilizer companies, will tie the hands of farmers.”
Nebraska corn grower Andy Jobman on behalf of NCGA shares there are shortages in the UAN market and NCGA members are concerned that they are not going to be able to get consistent access to UAN regardless of any duties that might be applied. “Simply put, the current supply of UAN does not meet demand,” he says.
“Fertilizer is one of our greatest inputs,” testified Jobman. “Nitrogen fertilizers, including UAN, account for more than 50% of fertilizer expenses. Even before the tariffs went into effect in December of last year, we were paying more than 300% for UAN year-over-year.”
Rep. Randy Feenstra, R-Iowa, told the Commission the global conditions have changed dramatically since the ITC began examining the UAN market utilizing market data from 2019 to 2021.
“Russia’s invasion of Ukraine has fundamentally altered the market for UAN. While I trust your rules and regulations regarding the backward review to evaluate the economic harm caused by bad actors, I would ask for the Commission to consider how that data deviates from the current reality and foreseeable future in these economic times. Imported fertilizer provides a large portion of coverage for our crops and this volatility has farmers very concerned,” Feenstra adds.
Jobman notes CF Industries has always been seen in the U.S. market as the “price setter.”
He adds, “In fact, CF Industries’ pricing power is so great that our members are deeply concerned about anti-competitive behavior. This is why we are participating in investigations by a number of state attorneys general and the U.S. Department of Agriculture into soaring fertilizer costs,” he says.
He says CF bought back $1 billion worth of shares last year. “I am not a trade lawyer, but it seems to me that a company that can buy back a billion in shares is not being injured.”
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