A key Moroccan fertilizer company, citing growing interest from farmers and lawmakers for more supplies of imported phosphate products, sees a pathway back to the U.S. market — potentially in time for spring application season.
Farmers could find a lot more phosphate products on the market when they start buying fertilizer to put in the fields in March or April, depending on what the International Trade Commission and the Commerce Department do over the next few months, says Kevin Kimm, CEO of OCP North America.
Two separate rulings last month from judges at the U.S. Court of International Trade came down in favor of Moroccan fertilizer giant OCP, telling ITC and Commerce to go back to the drawing board on decisions that essentially shut OCP out of the U.S. market, depriving U.S. farmers of a key source of imported Moroccan phosphate products.
The ITC ruled in 2021 that imported phosphates from Morocco and Russia from 2017 through 2020 significantly injured domestic producers Mosaic and Simplot, paving the way for countervailing duties. Commerce followed by setting those duties at about 20% on Moroccan imports and about 9% on Russian imports.
Kevin Kimm, OCP North AmericaBecause of the duty, OCP shut down all trade except for one product — triple super phosphate, or TSP. Shipments stopped for other popular products like Monoammonium phosphate, or MAP, and diammonium phosphate, or DAP.
OCP shipped 1.8 million metric tons of all of its phosphate products to the U.S. in 2019, according to data from the company. OCP has shipped about 130,000 tons of TSP since the duty went into place.
“Our customers are unwilling to take the risk of the rate changing,” Kimm said, addressing the ITC’s authority to change the rate of the countervailing duty during an administrative review. “So, it's important that number one, we don't feel the rate is warranted. Number two, free trade isn't allowed if a rate's in place where the customer doesn't know if that rate is going to be consistent because of the administrative review process.”
The ITC earlier this year issued preliminary decisions to lower the duty on Moroccan phosphate to about 14% and raise the duty on Russian phosphate to about 53%.
But that’s not good enough for OCP, Kimm told Agri-Pulse. Together with some farm-state lawmakers and farm groups like the National Association of Corn Growers, he is counting on either Commerce to reduce its CVD calculation to virtually zero or ITC to reverse its decision that Moroccan phosphate imports are damaging to U.S. producers.
“Domestic fertilizer production is steadily declining while the demand from our agriculture industry remains high across the country,” Sen. Roger Marshall, R-Kan., said in a statement to Agri-Pulse.
“Under the current regulatory conditions, the United States has made it exceedingly difficult, if not impossible, to expand phosphate production domestically. We must have access to import phosphate fertilizer to meet the needs of our producers. While I certainly don’t want foreign governments to distort trade with the United States, we can’t continue to punish fertilizer importers for a lack of domestic accessibility.”
The ability of farmers to access imported Moroccan phosphate from OCP now hinges on how the ITC and Commerce react to two recent decisions by Court of International Trade judges Timothy Stanceu and Stephen Vaden.
Stanceu ruled that Commerce made errors when it calculated the duty on Moroccan phosphate, and Vaden ruled that the ITC used flawed facts and logic when it made its decision that OCP products were unfairly harming U.S. producers. Commerce has 90 days from the date of the Stanceu ruling on Sept. 14, and ITC has 120 days from the Vaden ruling on Sept. 19 to incorporate those rulings into new decisions.
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Kimm says OCP is encouraged about the two judges’ verdicts. He stressed that the company is “working with the Department of Commerce in the ITC, providing all the relevant information to make the right decision for the U.S.”
But it's not just the judges’ rulings at play. Lawmakers and farm groups are rallying to pressure the government agencies and remove the duty on Moroccan fertilizer.
The National Corn Growers Association is taking the lead in bringing together American farm groups to plead their case to the Biden administration. The group has drafted a letter to Commerce Secretary Gina Raimondo and is now collecting signatures.
“High costs and limited availability of fertilizer continue to strain family farms across the United States and we urge you to consider the impact of phosphate tariffs as the Department of Commerce … works to reconsider its duty rate calculation,” NCGA says in a draft of the letter obtained by Agri-Pulse.
The draft letter goes on to say: “America’s farmers and ranchers have been saddled with rising input costs, especially over the last three years. Compounding international challenges have resulted in supply chain shortages, disrupted trade routes, and lack of available raw materials which have collectively upended the fertilizer market. With increasingly limited options of fertilizer sources, farmers have struggled to diversify their supply chains, exposing them to risk ... Supply chain diversity for fertilizer is crucial to minimize disruptions and mitigate the effects of adverse global events.”
According to NCGA, American farmers spent $36.9 billion on fertilizer in 2022, compared to $24.4 billion in 2020. Those costs have remained relatively high in 2023 at $36.4 billion.
Phosphate prices increased by 230% from 2020 to 2022, said Nancy Martinez, NCGA’s director of public policy for trade.
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