For Immediate Release
CONTACT: C. Robert Taylor (334) 844-1957
Mike Callicrate (785) 332-8218
October 9, 2012
Lincoln, NE – During the past five years, profit margins by the dominant fertilizer corporations have soared as high as 60 percent even while corporate reports showed substantial excess production capacity, blatant signs of price-fixing and collusive behavior, according to alarms raised by the Organization for Competitive Markets.
Despite the red flags, the Federal Trade Commission, the government body charged with insuring competitive markets, has spurned repeated requests by OCM and the American Antitrust Institute to investigate the international fertilizer trade.
“Sustained high profit margins coupled with excess capacity and barriers to entry for new firms are usually indications of price-fixing and collusive behavior,” says C. Robert Taylor, Alfa Eminent Scholar of Agricultural Policy at Auburn University in Alabama.
Since 2007, fertilizer corporations have experienced profit margins of more than 20 percent on phosphorous and a whopping 60 percent on potash, despite indications of excess production capacity in the supply chain. In 2008, when prices suddenly tripled, the dramatic spike was so egregious it contributed to food riots worldwide.
Three transnational corporations — two U.S.-based giants, Mosaic and Potash Corp., along with OCP, a third entity authorized and controlled by the Moroccan government — dominate the world supply and trade of phosphorus fertilizer, Taylor explains. The same two U.S. companies, along with another corporation Agrium, make up Canpotex, a Canadian-sanctioned potash cartel. Canpotex members and a cabal of three companies in the former Soviet Union (Uralkali, Silvinit and Belaruskali) dominate the potash business.
“Allowing the same two global corporations to dominate world trade of both P and K fertilizers invites international antitrust mischief,” Taylor observes.
The Federal Trade Commission (FTC) annually approves the PhosChem export cartel under the Webb-Pomerene Act. The act was intended to help small American firms cooperate on export sales in order to countervail against the power of foreign governments. “The only two members of the U.S.-sanctioned phosphorous cartel are giant transnational corporations, not small American businesses,” Taylor points out.
Recent trends seem to suggest monopoly price control in the global marketplace, Taylor continues. “Prior to 2008, P and K fertilizer prices were all priced about the same everywhere. However, in the last few years U.S. farmers have been paying about $100 a ton, or 25 percent more, than foreign farmers. It appears the sellers are deliberately overcharging the U.S. market,” he says.
OCM is continuing to call on the FTC to aggressively investigate these disturbing developments. According to the FTC website, “the Commission is responsible for … investigating association operations that may adversely affect competition within the United States.” (http://www.ftc.gov/ogc/stat2.shtm).
“A reliable supply of phosphorus and potash fertilizer at competitive prices is essential to a healthy domestic agriculture and critical to our national food security,” says OCM President Mike Callicrate, a rancher and meat processor from Colorado Springs. “The FTC is the top antitrust cop for fertilizer in general and for the Webb-Pomerene-sanctioned export cartel in particular. The agency’s repeated refusal to investigate international fertilizer trade raises disturbing questions.”
“Anticompetitive fertilizer pricing costs farmers and ranchers tens of billions of dollars annually. But everyone ends up paying at the grocery store. Ultimately it is food consumers—all of us—who are harmed by anticompetitive practices.
The Organization for Competitive Markets is a non-profit fighting for fair and competitive markets