Phosphate Tariff Would Be Yet Another Blow to America’s Farmers
Farmers face an uphill battle every year, it seems—from bad weather, to weed infestations, to insect invasions. On top of this, farmers have recently had to contend with trade wars and, now, COVID-19. This year was supposed to be a moderately good year for farmers, but then COVID-19 hit, and now the agriculture industry is expecting to experience a downturn of over 20%, according to the Food and Agriculture Policy Research Institute at the University of Missouri.
What farmers don’t need right now is more government meddling to increase uncertainty and to harm their economic outlook even more.
Yet, at the request of the giant Mosaic Company, the U.S. Department of Commerce is poised to decide whether to pursue an investigation into imports of phosphate from Morocco and Russia and could ultimately decide to slap tariffs of 30-70% on those countries’ phosphate exports to the United States. Those tariffs would amount to a tax on American farmers. Indeed, the estimated economic impact of applying duties of 30-70% on Morocco and Russia’s phosphate imports would amount to roughly $480-$640 million in additional unexpected fertilizer taxes on U.S. farmers, according to Bob Young, former Chief Economist for the American Farm Bureau Federation.
The geographic breadth of the impact would also be enormous. One of the most common inorganic fertilizers is diammonium phosphate, which is used on over 60% of American land under the plow. It is used for growing corn, cotton, soybeans, sugar beets, and wheat, which collectively occupy the vast majority of the croplands in the country.
Why is Mosaic Company doing this, when it already owns a majority of the phosphate production for fertilizers in the United States and a majority of the mines in Florida, where 75% of the phosphate in the United States can be found, according to the Florida Industrial and Phosphate Research Institute? The answer is that imposing tariffs on phosphate imports from Morocco and Russia would increase the prevailing cost of phosphates in the United States and allow the Mosaic Company, with its $19 billion-plus assets, to charge even more for its phosphate fertilizers than it already does.
We have seen in recent years how trade wars, countervailing duties, anti-dumping safeguards, and other measures instituted by the federal government have backfired only to hurt the very farmers the government was purportedly trying to help. In the case of phosphate imports, the current investigation and potential tax on imports stands not only to hurt farmers but to help a corporate behemoth to shore up its market majority in the country.
The Department of Commerce should turn down the request to cause further disruption in the agriculture industry—farmers are facing a tough enough row to hoe.