Two key players who argued their case on behalf of NCGA discuss the win and what it means for farmers.
Over the last several years, tariffs and trade have been a major pain point for growers.
But this summer, the NCGA has helped bring home a huge win for America’s farmers in a recent International Trade Commission case involving proposed tariffs on imported Urea Ammonium Nitrate fertilizers.
So in this episode, we'll talk to Andy Jobman, a Nebraskan corn farmer, and Jared R. Wessel, an attorney with Hogan Lovells in Washington, D.C. These two played major roles in arguing NCGA's case at the ITC hearings.
Andy and Jared will discuss how they argued their case, why this win was so important, and what the industry needs to do next to continue to fight unnecessary trade restrictions.
Andy Jobman:
The fact that CF industries said that farmers aren't their customers and that they're going to apply whatever they need to raise a crop regardless of price, I think spits in the face of the American farmer. I think we threw a punch back here and said, "Hey, you're not giving us the due credit that we deserve."
Dusty Weis:
Hello, and welcome to Wherever Jon May Roam, the national corn growers association podcast. This is where leaders, growers, and stakeholders in the corn industry can turn for big picture conversations about the state of the industry and its future. I'm Dusty Weis, and I'll be introducing your host association CEO, Jon Doggett from the fields of the corn belt to the DC beltway, we're making sure the growers who feed America have a say in the issues that are important to them with key leaders who are shaping the future of agriculture.
Dusty Weis:
Over the last few years, tariffs and trade have been a major pain point for growers. So we couldn't be more pleased to tell you that the national corn growers association has helped bring home a huge win for America's farmers in a recent case involving imported urea ammonium nitrate fertilizers.
Dusty Weis:
In this month's episode, we'll hear from two key players in NCGA's case before the international trade commission and discuss what it means and how the win is going to help growers bottom lines. But if you haven't yet make sure you're subscribed to this podcast in your favorite app. Also, make sure you follow the NCGA on twitter @nationalcorn and signup for the national corn growers association newsletter at ncga.com.
Dusty Weis:
And with that it's time to once again, introduce Jon. Jon Doggett, the CEO of the national corn growers association and Jon it's a hot summer, we're trying to keep cool here and maybe cool some tempers down here. We're also celebrating a recent win on fertilizer tariffs with the international trade commission. What can you tell us about that?
Jon Doggett:
You know, Dusty, it's nice to get a win in the summertime when it's so hot or anytime, but certainly the fertilizer issue has been an important thing in our industry for the last year or so. And just recently the international trade commission rejected a petition by CF industries, a fertilizer company in the US to place duties on urea ammonium nitrate fertilizers imported from Russia and Trinidad and Tobago.
Jon Doggett:
This decision's going to prevent fertilizer prices from going up even more in this coming planting season. And that's a big, big win, but we need a few more wins on this front, but two of my guests today played a major role in this decision and I want to thank them and I want to welcome them. First of all, welcoming Andy Jobman a Nebraska corn grower and Jared Wessel. Jared's an attorney with Hogan Level here in Washington, DC.
Jon Doggett:
Now Andy spoke to the commission on behalf of the national corn growers association at a hearing in June. And Jared's an expert on these kinds of trade cases and he represented NCGA in the legal proceedings. So welcome gentlemen, let me start by asking you how you came to be involved in this issue, Andy, and why is this so important to Andy Jobman, a corn grower for Nebraska?
Andy Jobman:
Yeah. Well, thanks Jon, for having me. Really, it came about a few years ago, actually it started with some phosphorous problems that we had at that point, and we are still fighting at this point with another company called Mosaic. Nebraska brought a resolution to our corn congress session that asked for an investigation and some research into what was going on with the increase in phosphorous fertilizer prices. And a year later, about, CF industries who like you just described is involved in the nitrogen fertilizer side of things, took a page right out of Mosaic's playbook and asked to have tariffs placed on imports.
Andy Jobman:
One thing led to another and all of a sudden we're paying higher prices for phosphorus fertilizer, paying higher prices for nitrogen fertilizer. And really the only really reason behind that is corporate greed, right? These companies have huge control over the market. Some would argue it's a monopoly and you have a big company like that, that tries to limit competition then there's really no control over price. And so prices skyrocket, and it's been a long fight over the last few years. We've had a lot of good input from our producers across the country that are up in arms over what's going on with higher prices. As a producer, we really have no other place to turn. We only have a few places we can buy fertilizer from, a few companies and we're kind of backed into a corner. That's a dangerous place to put somebody is backed into a corner and we really had no other options, but to fight this.
Jon Doggett:
Jared, you're obviously coming at this from a different angle, but certainly you've been very helpful and we appreciate your good work on our behalf. Talk about the legal side of this issue.
Jared R. Wessel:
Well, thanks Jon, it's a pleasure to be here today. My law firm Hogan Levels has a long history of supporting US agriculture. Actually one of our founders of the trade practice was a name that I think you'll probably recognize, Clayton Yider, who was the former USTR and also the secretary of agriculture.
Jared R. Wessel:
So the intersection of trade and agriculture's really a bit in the firm's DNA. It's also in my DNA. My grandfather was an Ohio corn farmer. He's got a couple fingers that he would like to have returned to him from some corn machinery. We've worked on a number of cases where our trading partners have brought cases against our agricultural exports, everything from corn to ethanol and DDGs as well.
Jared R. Wessel:
When the US fertilizer producers started bringing these trade cases really trying to keep foreign imports of fertilizer out, we were a natural fit to help both the importers, as well as the farming community to fight back before the various agencies that hear these type of cases.
Jared R. Wessel:
So in the particular case we're talking about, and I'll just call it the UAN case, because that's easier to pronounce. We helped Andy prepare for the hearing before what's called the US international trade commission and the US international trade commission is a group of five independent adjudicators who decide if the import's coming from Russia, as well as Trinidad and Tobago, if they're harming the US industry, which in this case was CF industries.
Jared R. Wessel:
Thanks to the testimony of Andy, as well as the testimony of a number of other farmers, importers and various other constituents, the commission voted 5-0 that such imports do not cause injury. So literally each and every commissioner that looked at this case decided that CF did not deserve the type of tariffs that it was advocating for.
Jon Doggett:
Well, and I think since Andy's on with us, we need to point out that Clayton Yider was from what state?
Andy Jobman:
From Nebraska and even wilder yet a little town called Eustis which is about a 10-minute drive from my house.
Dusty Weis:
I'll be darned, tiny little old world. Huh?
Jon Doggett:
It is a small world and Clayton Yider was a big, big figure in agriculture for many, many, many years. I got to know him early on in my career here in Washington and always an interesting guy to talk to. So Andy, talk about what has this done for the Jobman farm in Nebraska. How's it affected you and your bottom line and really importantly, how do you farm with those drastically increased input costs?
Andy Jobman:
Yeah. We went through a really crazy 18 months where we went from fertilizer prices being about as low as I can remember, which is great, right? You have a low input price that helps your bottom line, increases your profit margin, helps these family farms stay profitable and bring back the next generation. We went from really comfortable prices to an extremely uncomfortable position in which we had fertilizer prices that were 300% higher within 18 months.
Andy Jobman:
It was almost like a run at the banks that you hear about from the '30s when supply is short and all of a sudden you have your distributors telling you, "Hey, I don't know when the next time I'll be able to sell you fertilizer is." All of a sudden, every farmer in the county wants to go and make a purchase to secure at least a little bit, right? Because you know the next time that offering was going to come by, the price was going to be even higher. It honestly changed purchasing behavior and purchasing timing. A lot of times my distributor and I aren't even really talking about fertilizer until the early winter months, like maybe November and December, I had my fertilizer distributor coming to me in the fall of '21 saying, "Hey, we need to get something bought now, because I can't tell you when I will have another shipment of fertilizer." And I hadn't even harvested my 2021 crop yet and I was already being asked to put down a major down payment on fertilizer for next year's crop.
Andy Jobman:
So that really changes the dynamics when you start to think about cash flows on family farms and when you have money coming into the operation from harvest and when it needs to be going out for purchasing inputs. At the same time we have this whole issue in the Ukraine where US farmers are being asked to fill that void of production in the world to add a little bit of stability. But at the same time, we're getting asked to pay much, much higher prices to even produce that grain at the same time. Right? So we felt like we were getting both sides of the fight here. Happy to fill the void to help the rest of the world out, but at the same time, we're getting stretched really thin when it comes to what our profit margins are looking like.
Jon Doggett:
Well, we certainly have seen the concern express that we need to produce more food. We need to do it a more environmentally friendly fashion, we need to sequester carbon in the soils, but we're still having problems holding onto the existing tools that we have and let alone finding some new ones. Despite the win here Jared, tariffs are still in place for other fertilizers. Can you talk more about those?
Jared R. Wessel:
That's correct Jon, there are currently tariffs being applied on phosphate fertilizers, like MAP and DAP. In that case, in contrast to the UAN case, we lost that case at the international trade commission by a 4-1 vote. I would say that the one-vote dissent I think was a very powerful dissent. That case was brought by a company called Mosaic. That's a Florida-based company and it targets imports from both Morocco as well as Russia.
Jared R. Wessel:
The good thing though, is that the tariffs in that phosphate case were significantly lower than the tariffs that were potentially at stake in the UAN case. It's also important to note that decision is currently on appeal to the US court of international trade. And that's a special court in New York City that just hears trade cases. I was pleased by how the hearing went. I think the judge asked a lot of really good questions about the ITCs decision. If the judge does find that the ITC made a mistake in that case, he can remand it back to the international trade commission to essentially do a do-over of the case. If that happens, it would really be great to see the farming community, once again, come out in droves to fight against the phosphate tariffs like they did in the UAN case.
Jon Doggett:
Jared, let's talk about that. How susceptible are the courts there with outside comments from farmers and from others? Is it a political decision or is it a, "Hey, we really need to know what's going on out in the countryside." And extra weight is given to folks that are actually physically impacted by this?
Jared R. Wessel:
I think it's really important for the international trade commission to hear from the farmers in these cases. In the types of cases they're going to hear from the foreign exporters, they're going to hear from a lot of the companies that import the product and then resell it. But I think at the end of the day, it's really important to hear from the farmers about the impact that this is having on their daily lives.
Jared R. Wessel:
I think one of the really effective things that Andy did at the hearing was to talk about the shortages in the market. The international trade commission does not want to hear that the US industry is essentially unable to serve parts of the industry when it's trying to decide if that industry needs protection from foreign imports.
Jared R. Wessel:
So I think one of the things that Andy did that was really effective in his testimony was talk about some of the shortages, talk about some of the demand destruction that was happening. From my perspective as somebody who litigates these cases and as somebody who worked at USTR trade policy, always incredibly important to hear from the farmers. They are important in the abstract for what they do, feeding Americans and the world, but they are a powerful lobby. They sometimes I think don't fully recognize how powerful they can be. So I think whenever there's any kind of trade issue, I think hearing from the farmers is always imperative.
Jon Doggett:
You know, one of the big concerns we have had with some of our friends in the fertilizer industry is that we've had some of them say, "Farmers aren't our customer, our customer is the retailer or the co-op." Andy, how do farmers react to that statement that you're not the customer of the fertilizer company? I imagine you probably have picked up on that a little bit, but what was the reaction from you, and what's the reaction from your fellow growers when that gets discussed?
Andy Jobman:
I think the first reaction was just kind of total disbelief that there's this disconnect or this straight up arrogance, that they think that farmers and ranchers are not their customers. That'd be like saying people that purchase the corn chips that are made from the corn on my farm are not my customers, or not the people that are eventually using my product. So just a crazy comment I think, to make and one, I think that really got a lot of folks across farm country up in arms over.
Jon Doggett:
So this issue's played out like a... Well, not a horror movie, but maybe a suspenseful movie. The commission was going to rule against us, and then it seems that was that 11th hour change of heart. So Jared, give us again, what's that winning strategy. What's that argument that helped turn the corner on this from your perspective and how can we continue to work on that success?
Jared R. Wessel:
So the way these cases work is that the international trade commission makes a preliminary determination if there's a reasonable indication of injury and CF industries was able to meet that standard initially.
Jared R. Wessel:
After that, the ITC really digs into the case. I think the factual development testimony, et cetera, that all greatly expands into the final and it's that expansion of the information that I think really kind of turned the tide for us. I have to caveat that we haven't seen the ITCs reasoning yet. The only thing that we know is that the vote was 5-0. But just kind of observations from the hearing, I think it was really hard to see how CF industries, which again, was the only company that showed up to prosecute the case, it was really hard to see how that company was being harmed by imports. If you looked at their public financial statements and the statements that they were making to their investors, they made a billion dollars last year and they bought a billion dollars back of their own stock. That's billions with a B that's not millions.
Jared R. Wessel:
As somebody who's been a long time practitioner in the trade area, those numbers were astounding to me to see from a company that is essentially asking for trade relief when they're making a billion dollars of profits and buying a billion dollars back of their shares. So if you take how well CF industry was doing, and then you really contrast it with, I'd say both the inflationary environment, as well as the fact that we have 13 million children in the United States that are facing food insecurity, and you've got corn growers like Andy, who are telling the international trade commission, "Hey, I'm having trouble getting this material in order to feed Americans and the world, essentially." If you contrast that, a billion dollars in profits with people just trying to do their job, but they can't get the materials to grow crops, I think it's really hard for somebody to look at that objectively and find that the US industry deserves trade protection.
Jon Doggett:
So why did they bring the case, do you think?
Jared R. Wessel:
I don't want to overly speculate about why somebody would bring a case, but I would suspect that they probably saw that Mosaic was successful in the phosphate fertilizer case and attempted to essentially tag along on Mosaic's success. Other than that, I don't have a great idea. I do think again, the case was a 5-0 decision. So they couldn't even get one commissioner, I think, to buy into the story that they were selling.
Jon Doggett:
So Andy, what was giving testimony to the ITC? What was that like from your perspective as a farmer from Nebraska? You're speaking on behalf of the industry, what was it like for you to do that?
Andy Jobman:
Can I say it was fun and scary at the same time? You know, I think back to my days in 4-H and FFA in high school, and I would've never guessed that a small town boy from central Nebraska would be testifying in the ITC court for the American farmer, basically. So it was a great learning experience.
Andy Jobman:
I was really taken back by the genuine interest the ITC had in what we were talking about. They asked really good follow up questions on both sides. They asked great questions to CF industries, they asked great questions to us on the other side of the argument. You could really kind of start to see their wheels turning in terms of the type of questions they were asking that were really kind of trying to get down to, like Jared said, the nut and bolt of the issue of how is these tariffs necessary when CF industries is doing so well financially.
Andy Jobman:
I have a background in agronomy and crop science. I think that brought some really valid points forward when I talked about how producers are at this decision point where we're trying to lean down what we apply in terms of fertilizer, because it costs us so much, but there's also going to be producers out there that cut fertilizer costs just to cut them. T.
Andy Jobman:
Hat's going to put a huge amount of risk in terms of what we can produce as a crop, right? Because if you're stretching that crop thin on nutrients, just like if you were stretching a professional athlete on their diet, there's going to be some inherent risk there in terms of performance. So that's a major concern is if we have producers that are starting to reduce fertilizer rates, because it's just too expensive to apply, then all of a sudden we're going to have less production. If we have less production, that's going to impact food prices that are already going up, because of inflation in general.
Andy Jobman:
That's a really delicate position that we put not only our country in, but also the rest of the world. So high prices are the cure for high prices. I think this is a really good example of that. That farmers are going to leverage technology to try to make that pound a fertilizer go that much farther and the fact that CF industries said that farmers aren't their customers and that they're going to apply whatever they need to raise a crop regardless of price, I think spits in the face of the American farmer. I think we threw a punch back here and said, "Hey, you're not giving us the due credit that we deserve."
Dusty Weis:
Well, Jon, you described this as a suspense movie, but it sounds a lot like Mr. Jobman goes to Washington from where I'm sitting here. And definitely some Jimmy Stewart drama inherent in that. But Jared, now that the ITC has rendered its decision, what's the next step? What can we expect to see happen next?
Jared R. Wessel:
Two things, one, CF industries has the ability to appeal the case to the US court of international trade. In the same way that we appeal the phosphate case, they have the right to appeal the UAN case to the same court. I would just note though, the decision was 5-0, so I'm hopeful that they choose not to do that given the overwhelming signal that the international trade commission sent about the merits of this case.
Jared R. Wessel:
Second, CF industries has filed something with the department of commerce, which is the other government agency that runs these trade cases that we're talking about. They have essentially argued that because Russia lost its preferred trading status, that it is no longer a WTO member and because it's no longer a WTO member, they can implement the countervailing duty tariffs, even though they lost at the ITC. We don't think that has merit, but obviously that's something that we will continue to watch as the department of commerce handles that allegation by CF industries.
Jon Doggett:
So Andy Jobman, a lot of folks that listen to this podcast are not farmers and they're not closely tied to agriculture, so help us out. What's the difference between nitrogen and phosphorous fertilizers? What do they each do? How are they applied? What does it do to your crop? Give us a fertilizer 101 for a moment.
Andy Jobman:
You bet, I'll put on my professor hat and we'll take a stroll down this road. We'll try to keep it a fairly simple description, but when anybody goes out and buys a bag of fertilizer for your lawn that you want to apply, it's going to have three numbers on it. The first number is nitrogen, the second number is phosphorous and the third number is potassium. They're in that order, because nitrogen is by far the most important nutrient for most crops, for most plants. Phosphorus is kind of the second most important and potassium kind of comes in at a third and we call these are macronutrients. Right? They're the most important, the ones that are needed the most for growth, for production of grain or forage or whatever the particular crop is going to be.
Andy Jobman:
So nitrogen is by far what I, as a farmer, spend the most amount of my fertilizer dollars on when it comes to corn production. I would say it's almost over 50% of my total fertilizer budget is just on nitrogen. The next one is phosphorus. So these two are really, really big expenses when it comes to producing our grain crops. So when we had these tariffs put on these particular inputs, all of a sudden that made a really big portion of our budget, even bigger. That's why you saw farmers get up in arms over this so quickly.
Andy Jobman:
So UAN, which is the nitrogen case is a liquid form of nitrogen that we can apply. I can apply it with my planter, I can apply it with a host of different implements. I'm applying it right now through my center pivot irrigation systems to spoon feed my crop throughout the season and be as efficient as possible. Think of it like how we eat three times a day and sometimes snack in between. That's the same thing I'm doing with my fertilizer when I split apply it. It makes the use of that fertilizer so efficient, versus trying to eat all the food that I need to eat at breakfast. Right?
Andy Jobman:
You could never do that and make it to the time you go to bed without getting hungry. So we have all these different tools out there that farmers are using that increase the efficiency, that help us become really, really sustainable and also minimize our impact on the environment. So when we start to mess with the pricing of these unnecessarily with tariffs then all of a sudden it really changes the mindset of producers. Like I said, if it's going to be really expensive to apply nitrogen fertilizer, farmers are really going to leverage technology to try to stretch that nitrogen fertilizer unit even farther.
Jon Doggett:
So that plant absolutely has to have nutrients and we can apply it in a variety of ways, we can apply it in a variety of forms. Right now you're applying it through your center pivot in the water that you're applying to that crop. So I have heard from farmers over the years, well, granddad, it took two pounds of nitrogen for a bushel of corn and then dad used a pound in a quarter to pound and a half. And now a lot of growers are below a pound. In your part of Nebraska, what's the historical movement of that reduction? How much are you applying versus how much was applied 10, 20, 50 years ago?
Andy Jobman:
You know, when I was growing up, I would say that 1.2 to one and a half pounds of nitrogen per bushel was kind of a standard. When I was in college, you saw a lot of research that was starting to suggest getting closer to that one pound per bushel. Now with how we're spoon feeding and split applying the nitrogen, most years, we're less than a pound of nitrogen per bushel. I would say I try to plan around 0.85 to 0.9 pounds of nitrogen per bushel. I think you'll continue to see that creep down as technology improves, as our corn hybrids become more efficient through advanced breeding practices.
Andy Jobman:
It's just like anything else, especially like sports, high-performance athletes are always trying to beat that world record, whether you're talking about swimming in the Olympics or trying to beat that four-minute mile, everybody's trying different things, whether it's technology, different diets, and the same thing is true with corn farming and farming in general, I would say. We're always trying to beat our previous personal best.
Jon Doggett:
So that old adage sums good more is better doesn't really apply to application of fertilizer.
Andy Jobman:
No, definitely not. I would say more importantly is the placement of it. We can place things on a sub inch accuracy level now with our GPS equipment and then the timing of it too. A lot of this equipment allows us to apply it precisely next to the plant, but also precisely in terms of timing of when that plant actually needs it.
Jon Doggett:
How much good does it do you to have that fertilizer that you've applied down the creek down the river and in the Gulf of Mexico? Because I keep hearing these farmers purposefully pour on the fertilizer and they don't care if it goes down to the Gulf, do you care about whether it goes down to the Gulf or not?
Andy Jobman:
Yeah, absolutely. If I have a pound of fertilizer going down the river or blowing off in erosion, it's not doing what it was supposed to do. It's money leaving my pocket, money leaving my operation. It costs money to grow a crop. It costs money to run these farming operations and we don't take our inputs lightly. You'll see a lot of guys, I think probably would rather err on the side of under applying rather than over-applying simply because they're looking at the financial side of the situation. So yeah, the claim that farmers are just dumping it on and trying to maximize yield, we're certainly trying to maximize yield, but we certainly want to do it on an economic and environmental sustainable way.
Jon Doggett:
So of your major costs, your land cost, your equipment cost, your input cost, where's fertilizer fit into that ranking?
Andy Jobman:
Oh, when you're talking about purchasing land, land is always very expensive to acquire. They're not making any more of it and there's less farmable acres out there all the time just due to urban expansion and all that. Fertilizer's pretty high. It's probably one of our top two or three expenses.
Jon Doggett:
Jared, we're about to run out of time, but I want to ask you, what would you say to that government official or that regulator considering tariffs or regulations right now on fertilizer and the import of fertilizer? What would you say or what have you been saying? Obviously, you've been en engaged in this conversation quite a bit over the years. What do you tell them?
Jared R. Wessel:
Well, Jon, it's a pretty simple story for me and I think for the farming community. Any official face is a question of, do you want to increase food insecurity and contribute to the inflationary environment only to increase the profits of fertilizer companies that are already making frankly obscene profits? I think the answer to that question is clearly no, and we're going to fight to make sure that regulators and others know that trade off. I began talking about Clayton Yider I have his biography in front of me. That's going to be my summer reading and it's Clayton Yider rhymes with fighter. And I think in that spirit, anybody who tries to blame imports for any problems in the US fertilizer industry, I think is dead wrong and we'll continue to make that case going forward.
Jon Doggett:
Well, Jared Wessel, and Andy Jobman, thank you so much for being with us today. You know this has been an important issue in NCGA, I'm really proud of the work we've done. We came out swinging on the nitrogen front, on the phosphorus front. We're going to continue to do that. As we come out swinging and as we come up pushing back really hard, we have to go to the resources we have and we have a great resource in Jared and his firm and all the good legal work that has been done on corn grower's behalf by them.
Jon Doggett:
Then of course we have to go to our strength and our strength is our grassroots. It's the farmers out there who can come in and talk about what it means to their farm, to their family, to their community, to their ability to produce food and fiber and fuel for this world that is needing it so much.
Jon Doggett:
So thanks to both of you for being part of that big fight that we've been engaged in and we're going to continue to be engaged in that. My name is Jon Doggett, I'm the CEO of the national corn growers association. You've been listening to Wherever Jon May Roam, a podcast from the national corn growers association and we look forward to hearing from you about this episode and hope you listen to the next one as well. Thank you.
Dusty Weis:
That is going to wrap up this edition of Wherever Jon May Roam, the national corn growers association podcast. New episodes arrive every month, so make sure you subscribe in your favorite app and join us again soon. Visit NCGA.com to learn more or sign up for the association's email newsletter. Wherever Jon May Roam is brought to you by the national corn growers association with editing and production oversight by Larry Kilgore III and it's produced by Podcamp Media. Branded podcast production for businesses, podcampmedia.com. For the national corn growers association, thanks for listening, I'm Dusty Weis.