800 326 9054To provide much-needed relief to American farm families and consumers, President Donald Trump recently announced a major decision to exclude import levies on more than 200 agricultural products not produced in the U.S. in sufficient quantities. These commodities range from avocados and coffee to fertilizer and key minerals. This move is the right one if our goal is to bring down U.S. food prices and support American agriculture.
Included in these tariff exemptions is phosphate – a needed fertilizer component and a critical input into food production in the U.S. Phosphate is also a global mineral commodity – one the U.S. does not have enough natural domestic resources of to ever be fully self-sufficient. R
Rumor has it that Trump may even go beyond these recent tariff exclusions by undoing the failed Biden-era countervailing duties placed on phosphate imports that led to skyrocketing fertilizer and food costs across America.
In 2021, the Biden administration inexplicably imposed these duties – basically import taxes – under the guise of “protecting” American producers of phosphate and fertilizer from foreign competition. In practice, however, they’ve done the opposite, pushing down the U.S. supply of phosphate and more than doubling prices by 2022.
Prior to these new duties being announced and implemented, wholesale prices of monoammonium phosphate (MAP) – a standard fertilizer product – reached 112% of the 2018 to 2020 three-year average in Iowa. In October this past year, three years later with the market having adjusted somewhat, MAP wholesale prices were still 83% higher.
What did the Biden administration believe would happen once these duties were imposed?
In 2022, a total of 85% of the world’s tradeable supply of phosphate fell under these costly U.S. duties. This includes Morrocco, a U.S. ally and home to the world’s largest phosphate reserves, and a major longtime supplier of phosphate and end-use fertilizer upon which American farmers had relied on for up to 30 percent of their needs. And like other countries, Morocco shifted its products to other markets, creating supply shortages and spiking prices here at home.
The bottom-line: U.S. farmers now face significantly higher input costs, eating away at their margins and livelihoods, American agricultural products are less competitive abroad, and consumers unnecessarily pay too much at the grocery store. It is a “lose-lose-lose” situation for on-farm economics, U.S. competitiveness, and food price inflation.
Trump should now move beyond tariff relief by reversing Biden’s failed policies, something the Sen. Charles Grassley, R-Iowa, suggested during a recent Senate Finance Committee hearing with the U.S. Trade Representative nominees. After that hearing, Grassley posted on social media, “At Finance Cmte hearing 2day I urged USTR nominees 2 work w rest of Trump admin 2 END Biden Phosphate Duties that hurt farmers….”
These phosphate duties were another squall in the “perfect storm” of Biden-era policies Agriculture Secretary Brooke Rollins has cited as hurting U.S. agriculture and pushing up input costs.
Under Biden’s watch, interest rates spiked 73%, labor costs rose 47%, and fuel prices toplined over 35%. Add to all that phosphate duties driving fertilizer costs up 83%, and overall agriculture input costs, necessary for crop production, have exploded, all putting price pressures on farm balance sheets, U.S. farm exports, and Americans’ pocketbooks.
Even if Trump cannot easily undo Biden’s import tax mess on phosphate by executive order or regulatory action, there is a clear path forward.
The countervailing duties are up for review this year, giving Congress and the Trump administration a perfect opportunity to end them before the next planting season. Taking action is critical. According to USDA’s November update of its cost of production forecast, the outlook for fertilizer costs is projected to go up another 5% this year – that’s on top of the past five years of skyrocketing cost increases.
Eliminating these phosphate duties could get these costs under control and headed in the right direction for the benefit of U.S. farmers and consumers, and should be a key priority for the Trump administration and Congress.
Dave Juday is an agricultural economist and commodity market analyst, and founder and principal of The Juday Group.
*Sourced from Agri-Pulse.