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New economic analysis raises concerns over proposed nitrogen tariffs

Texas A&M study finds historical correlation between corn and fertilizer prices.

A new economic analysis from Texas A&M University has raised red flags for corn growers concerned about rising input costs.

Commissioned by 21 state corn organizations, the study found a historical correlation between corn prices and fertilizer prices.

“Those lines kind of lay right on top of each other, which means fertilizer and anhydrous ammonia prices have been moving in a lockstep with the price of corn for quite some time, and more so now than in the past,” said Joe Outlaw, lead researcher for the study.

From the end of 2020 to October 2021, farmers saw anhydrous ammonia prices rise by $688 per ton. A petition by CF Industries for the U.S. International Trade Commission to impose tariffs on nitrogen fertilizers from Trinidad, Tobago, and Russia could drive prices even higher.

“If tariffs create a supply shortage, it will drive up the cost even more,” said Chris Edgington, an Iowa corn grower and National Corn Growers Association president. “Our request is simple. We’re just asking that these companies keep us out of their trade disputes and do everything possible to keep their products available and affordable for family farms.”

For corn growers, a tariff-related rise in input costs could be detrimental.

“If the country’s exporting nitrogen into the United States was causing an economic detriment, I could understand a tariff,” said Jay Schutte, a Missouri farmer. “I very seriously doubt that they are suffering an economic detriment, but the American farmer certainly is, and this is going to spill over into the consumer market as well.”

If continued cost increases leave farmers unable to afford fertilizers, a corn shortage could be on the horizon, Schutte warns.

“In the United States, we have a lot of supply chain issues. We could certainly be setting the table to have supply chain issues next year with shortages of corn,” Schutte said. “We can only control so many factors in the growing cycle. The two biggest limiting factors for the corn yield are the amount of nitrogen we put on, and the amount of rain we get. We certainly can’t control the rain, but we can control the nitrogen we apply.”

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