Missouri-based Family Farm Action Alliance has asked the U.S. Department of Justice to launch an antitrust investigation into high fertilizer prices, saying in a Dec. 8 letter that fertilizer companies are abusing their market power to raise prices. The corporations “are using their monopoly power to raise and lower the price charged to farmers not based on basic supply and demand, but rather on the price the farmer is paid for their commodity crops,” the group charged.

“Out here in farm country, we can tell that something stinks about this fertilizer deal,” said Joe Maxwell, President of Family Farm Action Alliance. “The DOJ has the power and the authority to investigate fully, and American farmers deserve nothing less.”

The group pointed to company financial documents to show that fertilizer prices moved on the basis of crop prices, not fertilizer supply and demand. It cited a 2018 statement from Yara International ASA, Oslo: “[v]ariations in grain prices (corn or wheat) explain approximately 50 percent of the variations in the urea price, making grain prices one of the most important factors driving fertilizer prices.”

“These trends bear out at the local level,” said the group. “According to our own independent outreach to farmers in Northeast Missouri, potash costs went from $390 a ton in 2019, to $315 a ton in 2020, to $745 in 2021. Similarly, prices for anhydrous fertilizer went from $475 a ton in 2019, to $415 in 2020, to $805 a ton in 2021; today, it will cost more than $1,480 per ton for farmers who will need to apply in the spring of 2022. It is striking that the fluctuations of these prices so closely follow the price fluctuations for corn: in 2019, the average closing price per bushel was $3.85, in 2020 it was $3.64, and in 2021 it spiked to $5.73.

“For commodity farmers who grow corn and soybeans, all of this means that an opportunity to make a profit has been stolen: on average, corn prices are up more than 20 percent from the start of the year,” they continued. “Yet a report from the University of Illinois projects an increase of $80 per acre for fertilizer for corn and a $57 increase for soybeans, cutting into that elusive profit.

“In a highly-consolidated food system, the barriers to profitability for independent farms has effects that ripple outward,” the group said. “When an independent farm fails, the United States’ loosely-regulated farmland market means there is a strong chance the valuable land will be snatched up by billionaires, corporations, or global entities. As a result, the surrounding community loses neighbors, local employers, and a significant part of its tax base. Farm closures mean less funding for schools and hospitals, leaving the remaining population with little or no access to critical services.”

The group noted the consolidation in the fertilizer industry, adding that in 2019 only four corporations represented 75 percent of the production and sale of nitrogen-based fertilizer in the U.S. – CF Industries Holdings Inc., Nutrien Ltd., Koch Nitrogen Co., and Yara.

The group also alleged that despite claims of global fertilizer shortages, some companies are not producing at full capacity. It said Nutrien’s potash capacity exceeds current production levels, and that in 2020 the cash cost to produce potash was $59/mt, the lowest level on record for the company.

“The factors driving current high fertilizer prices are both well-known and well documented in the media: high energy prices, especially for natural gas, that have caused shuttered production by several of Nutrien’s competitors, especially in Europe; diminished supplies, in part due to export restrictions imposed by China and Russia; and a series of supply chain disruptions that include economic sanctions on potash producers in Belarus, freight and shipping disruptions, as well as weather related incidents such as Hurricane Ida earlier this year,” a Nutrien spokesman told Green Markets.

“These factors combined with high crop prices around the globe in 2021 to drive high demand at the same time that these input factors impact supply. In response to this heightened demand, Nutrien announced a 1 million mt increase in potash production earlier in 2021 and has continued to pursue brownfield expansion projects for our nitrogen business that we believe will yield an additional 500,000 mt in 2022. Nutrien has an established record of working hard to ensure that farmers around the globe get the crop nutrients that they need when they need them.”

Other producers named by the farmer group had not responded at press time.

The long-term impact of COVID-19 on ag retailers was the subject of a Dec. 2 panel discussion at the Agricultural Retailers Association’s (ARA) 2021 Conference and Expo in San Antonio, Texas. Matt Carstens, President and CEO of Landus Cooperative in Ames, Iowa, said Landus immediately shut its corporate office in the early days of the pandemic, and also instituted work-from-home and contactless delivery policies.

“And we had our best spring season ever,” he said, noting that the company gained an average of three more productive hours per day with employees working from home. As a result, he said Landus has now reduced its in-office staff to roughly 15 from a pre-pandemic roster of 70-80. A poll of Landus employees found that 92 percent were either neutral or positive about working from home, he said.

Clay Houchin, CEO of Buttonwillow Warehouse Co. in Buttonwillow, Calif., said his company gave employees the option of working at home and “bought a lot of plexiglass” for those who opted to stay in the office. He said navigating the policy was a challenge, but above all, the company “wanted employees to feel safe.”

He said a particular challenge was dealing with a politically polarized workforce. “This issue was right in the workplace, fed by social media,” he said. “It was dangerous how divisive an issue can be.” Carstens agreed. “The smartest thing we did was to force everyone to play by the same rules,” he said.

A separate presentation at the conference provided a detailed look at how an agricultural cooperative responded to a recent ransomware attack. Brad Brown, Assistant General Manager at Augusta Cooperative Farm Bureau Inc. in Staunton, Va., said his company was hit on July 15, 2021, at 4:00 p.m. with an attack from a group known as Suncrypt. He estimates that Suncrypt gained access to Augusta’s system roughly 13 hours before contact was made, likely through a phishing email.

While staff immediately shut down Augusta’s 85 computers, which had all simultaneously gone to white screens, two printers began spitting out ransom notes notifying the company that it had been hacked and to await further instructions. He said staff were also “bombarded” by calls from hacked phones within the company.

Brown said Augusta immediately called its banking partners, along with all stores and store managers, and pulled in local IT experts that included a forensics team, a privacy attorney, and a negotiator. Also on the team was Mike Moore, Executive VP of EFC Systems, which helps restore data and provides tech security.

Brown said all of the company’s computers were wiped by 10:00 p.m. that same day. About two-and-a-half days after the attack, a negotiator with Suncrypt initiated contact and demanded $500,000 in ransom, via bitcoin.

By this time, Brown said Augusta was aware that the attack had hit its HR and controller systems, but the company’s customer data was secure. Augusta also had a sound backup system, which allowed its tech infrastructure to be fully operational is less than a week.

Brown said Augusta decided nothing would be gained by paying the ransom, but the company’s negotiators engaged in delay tactics with Suncrypt, and the ransom demand fell from $500,000 to $33,000 over a two week period. The last contact with Suncrypt was on Aug. 14, nearly a month after the attack. No ransom was ever paid.

Brown and Moore said many lessons were learned from the incident. Augusta was forced to go to hand tickets while its systems were down, which Brown said was “a huge learning process.” The attack also prompted a “massive rebuild” of the company’s IT security. While Augusta’s insurance provider covered software investments to rebuild, Brown said the policy would only pay out a total of $10,000 in ransom.

“In the ag industry, less than one percent of the annual budget is typically spent on tech and tech-related issues,” Moore said. As cyber-attacks grow in number and complexity, and target smaller, unlikely companies such as Augusta, Moore said ag companies “will be obligated to pay more for tech security going forward.”

New Cooperative Inc., Fort Dodge, Iowa, with struck by a ransomware attack on or around Sept. 17 (GM Sept. 24, p. 1), and Crystal Valley, a farm supply cooperative headquartered in Mankato, Minn., posted an alert on its website on Sept. 21 (GM Oct. 1, p. 1) confirming that it had been targeted in an attack that infected its computer systems and “severely interrupted the daily operations of the company.”