The following is a brief analysis by Krista Swanson, the lead economist for the National Corn Growers Association.
Phosphorus, an essential nutrient for plant growth and development, is important for corn productivity. Farmers use fertilizers to replenish phosphorus and other nutrients in the soil to maintain healthy and fertile land, but vital fertilizer management comes at a high cost. This is especially true for corn producers, particularly right now.
Since 1996, average annual fertilizer costs were about one-third of total operating costs incurred in growing a corn crop. For 2023, the United States Department of Agriculture (USDA) projects fertilizer to make up 46% of the total operating costs incurred by the U.S. farmer in growing a corn crop, unchanged from 2022, but up from 37% for the 2021 crop and 35% for the 2020 crop. Aside from 2008, the current fertilizer-to-operating-cost ratio is at the highest point since the 1970s.
Compared to other major commodity crops, corn not only has the highest fertilizer costs in dollar value, but also the highest fertilizer-to-operating-cost ratio. Wheat is a close second, with the USDA forecast at 45% for 2023, but fertilizer costs are only 23-26% of the total operating costs for soybeans, cotton and rice.
The fertilizer cost ratio has jumped in recent years because the cost of fertilizer has increased relatively more than other operating costs. The farm price of phosphorus fertilizers DAP (diammonium phosphate) and MAP (monoammonium phosphate) increased rapidly from September 2020 through late spring 2022. Prices have declined from the 2022 high point, but remain historically high. The Illinois farm price reported by USDA for DAP is $825 average for March 2023, double the average for September 2020 price at $414, and well above the $525 average price from 2009 to 2020. In addition to MAP, the trends for nitrogen and potassium fertilizers are similar.
There is no substitute for phosphorus in growing corn. And phosphate rock, a non-renewable resource, is the only significant global resource of phosphorus for agriculture fertilizers.
The U.S. Geological Survey reports China, Morocco and the U.S. have combined to produce about two-thirds of the world’s annual phosphate rock production in recent years. Although the U.S. consistently produces at least 85% of domestic phosphate consumption annually, the U.S. is reliant on imports to meet a portion of demand for the nutrient. The U.S. houses 1.4% of known phosphate reserves globally. In comparison, nearly 70% of the world’s reported phosphate reserves are in Morocco.
That underscores the importance of fair and open access to imported fertilizers now and into the future, from Morocco in particular. In March 2021, the International Trade Commission (ITC) voted to begin imposing tariffs over 19% on imported fertilizers from Morocco. The National Corn Growers Association and five other national groups filed a joint amicus curiae brief in the U.S. Court of International Trade to overturn the ITC decision.
In an already high-cost environment, tariffs on fertilizer imports makes it more expensive for corn farmers to maintain fertile soils and complicates trade flows that can lead to shortages at the farm level. We need ITC to act by removing the import tariffs.