U.S. Secretary of Agriculture Tom Vilsack holds a press conference with reporters on Feb. 24, 2022. (Screenshot of virtual press conference)
The Russian invasion of Ukraine this week might drive up the costs of farm fertilizers globally — which nearly quadrupled last year in price in the United States and remain high — and presents an opportunity for unscrupulous companies to artificially inflate those prices further, according to U.S. Secretary of Agriculture Tom Vilsack.
“That’s my biggest and deepest concern,” Vilsack said Thursday of the invasion’s immediate effects on U.S. agriculture, “and we’re obviously going to keep an eye on that.”
Last year’s fertilizer price spike has been attributed to a confluence of issues, including shortages of natural gas and limited fertilizer stockpiles. Iowa Attorney General Tom Miller announced Thursday that his office will conduct a market study in the next few months to better understand why the prices have soared.
Vilsack said his office will watch for potential price gouging as a result of the invasion, which began early Thursday. Russia is a major global supplier of farm fertilizers and is the source of about a third of Europe’s natural gas. President Joe Biden announced sanctions against Russia on Thursday that target its financial system and would halt technology exports to the country. It’s unclear how Russia might retaliate.
“I sincerely hope that no company out there — whether it’s fertilizer or any other supply that may be impacted by this — will take unfair advantage of the circumstances of this situation, making sure that they don’t use this situation as an excuse for doing something which isn’t necessarily justified by supply and demand,” Vilsack said.
Russia had already begun to limit its fertilizer exports late last year and recently imposed a two-month export moratorium on ammonium nitrate, a key fertilizer for corn.
In November, Iowa farmers faced fertilizer price quotes that were three to six times higher than the previous year. That has led to speculation that farmers will plant fewer acres of corn and reduce the amount of fertilizer they apply to their fields. The planting season is about two months away.
Vilsack said supply shortages reinforce “the need for us to look at our own capacities domestically, and figure out ways in which we can be perhaps a little bit less reliant on outside forces.”
He doubted the potential shortages will have an immediate and significant effect on food prices in the United States, but “if I were a commissioner or an ag secretary in a European country, I would have a much different feeling about this.”
Ukraine has fertile soil that is comparable in richness to Iowa’s and is a major wheat and corn producer in eastern Europe.
“We in the U.S. are fortunate,” Vilsack said. “We have tremendous production capacity.”
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