Questions about a big sale, a big attack, supply concerns and steady price jumps bring uncertainty to any producer or landowner dependent on fertilizer. The state of fertilizer these days involves many questions.
In Iowa…State Auditor Rob Sand wants the U.S. Department of Justice and Federal Trade Commission to block Koch Industries’ $3.6 billion acquisition of OCI Global’s Iowa Fertilizer Company in the southeast corner of the state. The plant makes nitrogen fertilizer and diesel exhaust fluid.
Sand maintains that the sale will reduce competition for nitrogen fertilizer in the region, increase costs for producers because of that reduced competition, and leave taxpayers without some of the benefits that they were promised a decade ago.
Leaders had originally assembled a package of local, state, and federal tax incentives that totaled more than half a billion dollars to lure OCI Global (as the company is now called) to the region, boost available fertilizer supply, and to increase competition.
RELATED: The Des Moines Register broke down the history of the plant, along with background on the companies involved. Read that here.
Sand wrote in his letter to federal investigators:
“If this acquisition by Koch Industries is allowed to proceed, the cost of fertilizer to farmers will likely increase due to further industry consolidation. That hurts Iowa producers. It also negates the original intent of the deal that OCI Global reached with Iowa taxpayers to increase competition in the industry. Reneging on a deal may not seem like a big deal to a big corporate entity like OCI or Koch Industries, but for most Iowans, our word is our bond.”
Meanwhile, Jeff Reichman -- a Republican who represents the region in the state senate -- expressed optimism about the possible purchase and said in a statement that he was “personally excited about the sale.”
He praised the potential of the new owners and criticized what he characterized as partisan opposition. Reichman added in this statement, “Koch Industries has a history of growth and investment that should be cause for excitement in southeast Iowa, not a grandstanding event for the auditor and an attempted slap in the face to southeast Iowa by Sand.”
Koch Industries through its subsidiary, Koch Fertilizer, has distribution and retail locations across the United States and Canada. There are eight operations in Iowa. The company also has facilities in Nebraska, North Dakota, South Dakota, Kansas, Indiana, Oklahoma, Illinois, Missouri, Minnesota, Michigan, Texas, Montana, Louisiana, Wyoming, California, North Carolina, Saskatchewan, and Manitoba.
The company reported that it produces and distributes more than 10 million metric tons of product per year. Learn more about Koch Fertilizer here.
In North Dakota…increasing the fertilizer supply is a driving force behind a state authority’s decision to award $125 million in forgivable loans. AgWeek laid out details of the deal which would provide $75 million to the Prairie Horizons Energy Solutions project and $50 million to a NextEra Energy Resources project. The loans would essentially turn into grants after the companies complete their projects.
The projects have a combined estimated cost of $3.5 billion.
The North Dakota legislature previously approved the funding for the projects. Both plan to make the fertilizer through the process of hydrogen electrolysis. KFYR-TV in Bismarck provides this background on the state funding. Watch that here.
Hydrogen electrolysis is “the process of using electricity to split water intro hydrogen and oxygen,” according to the U.S. Department of Energy. The department calls the process “a promising option for carbon-free hydrogen production.”
In Illinois…. Corn, soybean, and wheat producers know what a major expense fertilizer can be. And that expense has risen quickly over the past decade. University of Illinois researchers tracked comparisons on higher fertilizer costs in central Illinois versus Brazil.
Brazil imports more of its fertilizer supply, so producers experience a heavier financial burden than U.S. producers. But overall, this shows how much fertilizer costs have jumped. Here is a key part of that research:
“Fertilizer costs for soybeans in Mato Grosso (Brazil) increased from $88 per acre in 2016 to $187 per acre in 2023, an average annual growth rate of 16.4%. In the same period, fertilizer costs for soybean production in central Illinois have increased from $49 to $95, an average annual growth rate of 12%.”
16.4 percent and 12 percent are unwelcome figures for producers concerned about profitability as they factor in significant input costs.
The University of Illinois’ Farmdocdaily assembled a trendline chart of overall direct costs for soybean producers that included fertilizers, seeds, pesticides, drying/storage costs, and crop insurance. After consistent direct costs over a half dozen years, producers have dealt with price escalation over the past three years. Costs are up about 40 percent over that three-year period compared to the previous six.
Michigan Farm Bureau included the Farmdocdaily research in its Michigan Farm News update. Read that here.
Across the United States…there are concerns about what could be ahead with continued conflict across the world. “If all of a sudden we have to start talking about a storyline that considers the inability to transit vessels through the Persian Gulf,” said Josh Linville, StoneX Group Vice President of Fertilizer, in an interview with the Iowa Agribusiness Radio Network. “The world will focus on oil shipments.”
Ukraine’s ability to produce fertilizer has been challenged by Russia’s ongoing attacks since February of 2022.
Linville encouraged producers to stay in contact with fertilizer suppliers. He isn’t advising them to buy all the fertilizer they need immediately. “Let’s continue to be talking about this,” Linville suggested.