Farm Economy In The Balance

All farmers rely on our products to produce food, feed, and now fuel, with corn being the nation’s largest fertilizer consuming crop. Since the introduction of the American Clean Energy and Security Act of 2009 (H.R. 2454) in the House, The Fertilizer Institute (TFI) has been expressing serious concerns with the impact of this legislation on the fertilizer industry, its farmer customers, and the U.S. food supply. The nation’s retail dealers should be particularly concerned with the devastating impact that a cap and trade climate policy could have on the U.S. economy, particularly on their farmer customers’ pocketbooks.

While we are most proud of our role in feeding people, we also grow healthy local economies. A new study conducted for TFI by Charles River Associates (CRA) finds that the fertilizer industry contributes $57.8 billion dollars to the U.S. economy and supports more than 244,000 jobs nationwide. According to the CRA report, the average compensation of the 24,000 employees in the fertilizer manufacturing sector is 78 percent higher than the average U.S. worker’s compensation. These jobs help local economies flourish and are often the best employment opportunities in the mostly rural communities that they support.

Fertilizer blending was also identified as a significant contributor to economic activity with an annual contribution of $13.5 billion in output and more than 56,000 jobs. According to CRA, the economic activity in the fertilizer mixing sector is more disperse than in the nitrogen and phosphate manufacturing sectors. This is because the economic activity is not concentrated in large plants but instead in an estimated 6,000 fertilizer mixing facilities that are located near cropland where fertilizers are consumed. The top states with economic contributions to the fertilizer mixing sector are Indiana, Florida, Texas, California, and Ohio.

As CropLife magazine readers are aware, we use natural gas as a feedstock in a fixed chemical process that combines nitrogen from the air and hydrogen from the gas to produce nitrogen fertilizer, in a form that the plant can take up. Unless the laws of chemistry change, there is nothing we can do to alter this process and, consequently, as much as 90 percent of the cost of producing a ton of ammonia, the building block for all other nitrogen fertilizers, can be tied directly to the price of natural gas. In 2008, the nitrogen fertilizer industry spent $3 billion on natural gas. Each $3 per one million BTU increase in the cost of natural gas raises nitrogen fertilizer production costs by over $1 billion. These are not costs we can pass on to our customers as our industry is a price taker in the global fertilizer market.

Currently, only 30 nitrogen plants are still operating in the United States, and over 55 percent of the U.S. farmers’ nitrogen fertilizer is imported. Of this imported fertilizer, 82.7 percent comes from countries without climate change policies in place to regulate carbon, and a majority of these countries are those from which we are striving for energy independence.

The Threat To Agriculture

The challenge for us today is to produce more food on limited arable resources. In fact, the Food and Agriculture Organization has indicated that agriculture must increase food production by 50 percent by the year 2025 and double it by 2050. If a cap-and-trade system is enacted in the US, it is imperative that American farmers are able to partially offset these additional crop production costs. Farmers should get credit for their very important role in the reduction of climate change related emissions. However, it is equally important that farmers aren’t burdened with significantly increased input costs that would far exceed any offset credits they receive under the bill.

It is also crucial that the language regarding commercial fertilizer in the House passed bill be revised in the Senate bill. TFI is extremely disturbed that the House-passed version of the bill incentivizes several agricultural practices that likely will have little impact on reducing GHGs and in some cases may increase GHG emissions. We urge the Senate to act quickly to ensure that science is the basis for any grower incentives. GHG emissions can come from all types of nitrogen sources applied to the soil, regardless of whether these are applied as commercial fertilizer or manure.

Leave a Reply

Legislation Stories

Pipe rack
LegislationCourt Sides With Ag Retailers On PSM
September 23, 2016
The D.C. Court of Appeals has ruled the Occupational Safety and Health Administration violated the Occupational Safety and Health Act when Read More
Soybean Plant closeup
LegislationOhio Soybean Association Names Pat Tiberi Legislator Of The Year
August 3, 2016
The Ohio Soybean Association (OSA) has announced that Congressman Pat Tiberi (R-OH) has been named one of two Legislators of Read More
Soybean Field
LegislationOhio Soybean Association Names Brian Hill Legislator Of The Year
July 19, 2016
The Ohio Soybean Association (OSA) has announced that State Representative Brian Hill (R-Zanesville) has been named one of two Legislators of Read More
Grower Truck at retailer
CropLife 100ARA Seeks Comment on Ag Driver Sleep Apnea Issue
July 5, 2016
The U.S. Department of Transportation’s (DOT) Federal Motor Carrier Safety Administration (FMCSA) and Federal Railroad Administration (FRA) are seeking public Read More
Trending Articles
Corn Field
Eric SfiligojFacing Ag Industry Challenges
September 26, 2016
At the 2016 annual Mid America CropLife Association (MACA) meeting in September, a pair of crop protection company representatives discussed Read More
Bayer Monsanto
Crop InputsBayer-Monsanto Mega-Merger: 6 Things You Need To Know
September 14, 2016
Mega mergers have become almost routine in the agricultural industry. Right on the heels of Monday’s news that fertilizer giants Potash Read More
Potash Corp Agrium
Crop InputsAgrium, Potash Corp To Merge To Create $36 Billion Company
September 12, 2016
Canada’s Agrium Inc. and Potash Corp of Saskatchewan Inc. have agreed to combine in a deal that would create a Read More
Osage Co-op Elevator Osage, IA Finished Building
OpinionAre We Crazy?
September 8, 2016
At some point in the first few months of my employment here at CropLife® magazine, I started getting curious about Read More
ManagementMAGIE 2016 Highlights and Deere Anti-Trust
September 1, 2016
CropLife Editor Eric Sfiligoj discusses the recent Midwest AG Industries Exposition and the Department of Justice’s objection to John Deere Read More
ASMARK 2016 Retailers Live! Tour - CPS
CropLife 100CPS Acquires Texas Retail Operation
August 23, 2016
Crop Production Services (CPS) has acquired the assets of Larry’s Chemical and Spray, Inc., for an undisclosed amount in an Read More
Latest News
Growmark FS Outlet
Industry NewsGROWMARK To Purchase Suncor’s Share Of UPI
September 26, 2016
GROWMARK and Suncor have reached an agreement in which GROWMARK will purchase Suncor’s 50% interest in UPI, Inc. in Ontario, Read More
Corn Field
Eric SfiligojFacing Ag Industry Challenges
September 26, 2016
At the 2016 annual Mid America CropLife Association (MACA) meeting in September, a pair of crop protection company representatives discussed Read More
Syngenta Seedcare Institute
Seed/BiotechSyngenta Opens New North America Seedcare Institute In …
September 23, 2016
Syngenta unveiled its new Seedcare Institute in Stanton, MN, during a recent grand opening celebration. More than 150 industry leaders, Read More
StewardshipMonsanto Invests $1.6 Million In System To Quantify Gre…
September 23, 2016
The USDA – Natural Resources Conservation Service (USDA-NRCS) recently awarded the National Corn Growers Association (NCGA) and its Soil Health Read More
Pipe rack
LegislationCourt Sides With Ag Retailers On PSM
September 23, 2016
The D.C. Court of Appeals has ruled the Occupational Safety and Health Administration violated the Occupational Safety and Health Act when Read More
ManagementPacific Coast Fertilizer Announces Interest In Longview…
September 22, 2016
Pacific Coast Fertilizer LP (PCF) announced at the Cowlitz Economic Development Council board of directors meeting its interest in developing Read More
Young corn plants in soil
UncategorizedCool Planet Raises Additional $9 Million To Commerciali…
September 22, 2016
Cool Planet has announced the first close of a new financing round to commercialize the company’s Cool Terra Engineered Biocarbon Read More
Crop InputsJim Loar Promoted To President And CEO Of Cool Planet
September 22, 2016
In a move that reflects and reinforces the company’s commitment to the agricultural market, the Cool Planet board of directors Read More
BlendersNorth Dakota Coop Debuts Dry Fertilizer Plant
September 22, 2016
North Central Grain Cooperative has begun operations at a new dry fertilizer plant at its Rolla, ND, site. It is Read More
Crop InputsMonsanto, Bayer Officials Defend Proposed $66 Billion M…
September 21, 2016
Top officials for Monsanto and Bayer defended their proposed $66 billion merger before skeptical senators on Tuesday, insisting that the Read More
ManagementUpcoming Shows & Recent Events
September 19, 2016
Editors Paul Schrimpf and Eric Sfiligoj talk about upcoming trade shows and events and review the Mid America CropLife Association Read More
Industry NewsVerdesian Life Sciences Appoints New CEO
September 19, 2016
Verdesian Life Sciences, a plant health and nutrition company, today announced that its board of directors has named Kenneth M. Avery Read More
Corn
Crop InputsEPA Settles With Syngenta For Alleged Multi-Regional Pe…
September 19, 2016
The U.S. EPA has announced a multi-region settlement with Syngenta Crop Protection, LLC (Syngenta) in Greensboro, NC, for alleged violations of Read More
ManagementMerger Mania
September 16, 2016
Editors Paul Schrimpf and Eric Sfiligoj discuss this week’s mega-ag mergers of Bayer and Monsanto and Potash and Agrium. Read More
Monsanto sign
Crop InputsMonsanto Ends Up Being A Bargain For Bayer
September 16, 2016
History will say Bayer got a bargain in its $66 billion purchase of Monsanto, writes David Nicklaus, St. Louis Post-Dispatch. The Read More
Greg Musson, Gar Tootelian
CropLife 100California Ag Retailer Steps Up To Feed Families Affect…
September 16, 2016
GAR Tootelian, Inc. (GAR) in Reedley, CA, is challenging the Central Valley to help raise enough money and provide 525,000 meals Read More
Crop InputsBayer, Monsanto CEOs Discuss Merger
September 15, 2016
Werner Baumann, Bayer CEO, and Hugh Grant, Monsanto CEO, discuss why they decided to merge their companies. Read More
Corn close up
Crop InputsNY Times: Bayer-Monsanto a Bad Deal for Farmers
September 15, 2016
Via NY Times: Don Halcomb, a 63-year-old farmer in Adairville, KY, is expecting his profit to vanish this year, largely Read More