In February, Iowa corn farmer Lance Lillibridge bought nitrogen fertilizer for the spring growing season at $530 per ton. Days later, the price had jumped to $950 per ton as the conflict in the Middle East unfolded.
“For that price to explode within a week like that, it just doesn’t make any sense,” said Lillibridge, who farms about 1,250 acres of corn with his son in Vinton, Iowa, northwest of Cedar Rapids.
US farmers have responded to the dramatic price increase with a string of lawsuits accusing the world’s biggest fertilizer companies of cartel-like conduct. In multidistrict litigation, the farmers claim a handful of companies have been secretly coordinating fertilizer price hikes since at least 2021 in violation of federal antitrust law.
Fertilizer giants—Nutrien AG Solutions,
About a third of the world’s exported fertilizers pass through the Strait of Hormuz, Corey Rosenbusch, president of The Fertilizer Institute, told the Senate Agriculture Committee last month. The strait was effectively closed in February before the US and Iran struck an interim agreement on June 14 to reopen the key waterway. Analysts say it could take months to normalize trade flow.
The Justice Department was investigating the fertilizer price increases as of March, according to Bloomberg News. And the head of the Federal Trade Commission said his agency is as well.
Lawsuits often piggyback on a DOJ probe, said Alicia Batts, a former attorney adviser at the FTC and founding partner of Batts Legal LLP, a boutique antitrust firm in Washington, DC.
“It’s a much heavier burden for a private plaintiff to try to get information than the US government,” Batts said. “The government starts to investigate, and then plaintiffs’ lawyers start looking at the investigation.”
Mosaic, which produces nearly half of the phosphate-based crop nutrients used by farmers, didn’t respond to a request for comment. Yara, Nutrien, CF, and Koch also didn’t respond.
The companies jointly defended themselves in court filings, saying that hundreds of producers in more than 60 countries compete to sell fertilizer.
“Domestic pricing can be heavily influenced by global events,” the companies said. “Plaintiffs acknowledge that ‘world events such as the Covid-19 pandemic, fertilizer export restrictions in China, and Russia’s war on Ukraine could explain some market fluctuation’ for fertilizer.”
Potash exporter Canpotex Ltd., another defendant, declined to comment. The Fertilizer Institute, also a named defendant in some of the cases, didn’t respond.
‘No Competition in This Marketplace’
According to the American Farm Bureau Federation, prices for “urea” fertilizer increased by nearly 50% since the end of February, marking the largest month-to-month percentage increase.
Lillibridge, who is not part of the litigation, said he and other farmers try to purchase fertilizer early to take advantage of off-season discounts. He buys his fertilizer through a retailer affiliated with a co-op and sells his waxy corn to agricultural giant
But individual farmers like Lillibridge don’t negotiate directly with the big fertilizer suppliers. They communicate with retailers and co-ops.
“What’s extended to us as farmers is, ‘OK, our price of phosphorus is this, and if you don’t buy it today, there is a good chance you’ll never get it,’” Lillibridge said. “The reason those choices are gone is because there is no competition in this marketplace.”
The Judicial Panel on Multidistrict Litigation transferred the price-fixing cases to the US District Court for the District of Kansas for pretrial proceedings this month. This type of litigation can take many years to play out.
The US Supreme Court in its landmark 1977 Illinois Brick Co. v. Illinois decision found that only direct purchasers of goods and services can pursue damages under federal antitrust law. Some farms have sued with direct purchaser claims while others are pursuing indirect claims.
Smaller farms that buy fertilizer from cooperatives and other intermediaries are more likely to pursue claims under state law, which can be more flexible toward standing for indirect buyers, Batts said.
‘We’ve Gotta Have Nitrogen’
While the cases begin to play out in court, Iowa corn farmer Jason Orr has opted to cut back on his use of nitrogen fertilizer.
“We really are trying our best to batten down the hatches, be efficient, and do it in the cheapest way we possibly can,” Orr said. “We can slither by a year or two and not put on any phosphorus or potassium or sulfur, but if we want to produce a crop, we’ve gotta have nitrogen.”
Kentucky farmer Terry Wimp, who farms corn and soybeans, said he’s trying to find fertilizer from alternative sources but is cutting back on equipment purchases and other controllable costs.
The higher prices come on top of other headwinds hitting farmers including developers seeking to buy up farmland for data centers, rising input costs, and people no longer wanting to farm, said Benjamin Widlanski, a partner with Kozyak Tropin & Throckmorton who has filed four antitrust suits on behalf of plaintiffs.
“What I have heard from people I have spoken to is they are one bad season away from giving up,” Widlanski said.
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