Two federal lawsuits have been filed by farmers accusing several fertilizer companies of conspiring to illegally keep prices high over the last several years.
The lawsuits come at a time when the U.S. Department of Justice and USDA promised scrutiny of fertilizer monopolies, and as security problems in the Strait of Hormuz near Iran has led to an increasing in fertilizer prices.
Union Line Farms in Iowa filed a class-action lawsuit in federal court in Colorado alleging several global companies conspired to fix, raise, maintain, or stabilize prices for nitrogen, phosphate and potash.
Union Line Farms is named as the lead plaintiff in the case, filed March 13. The lawsuit alleges The Mosaic Co., Nutrien LTD, Nutrien Ag Solutions, CF Industries Holdings, CF Industries, CF Industries Nitrogen, Koch Agronomic Services, Yara International ASA, Yara North America and Canpotex LTD conspired to keep fertilizer prices high.
A second class-action lawsuit was filed March 7 by Fire Creek Farms of New York against Nutrien, CF Industries, Koch, Yara, The Mosaic Co. and Canpotex. The lawsuit, filed in U.S. District Court in Illinois, alleges similar allegations of conspiring to raise prices for U.S. farmers.
In a letter sent last week, 64 state and national organizations have asked Mosaic and J.R. Simplot to drop support for phosphate import duties the groups say are inflating prices.
As of Tuesday, the companies have not responded to the farm groups’ request, and the Colorado District Court has not assigned a judge to the lawsuit.
The Fire Creek Farms suit notes the U.S. fertilizer industry has seen “drastic and significant” going back to the 1980s, and the number of firms in the market has shrunk from 46 to 13 over the same period.
The Union Line Farms lawsuit notes that in 1990 there were dozens of NPK fertilizer producers in North America, but now only 3 — Nutrien, Mosaic and CF industries — control most of the domestic market.
CF Industries, Nutrien, Koch and Yara control 80% of the nitrogen fertilizer market in the U.S., and Nutrien and Mosaic control 90% of the phosphorus and potash fertilizer markets here, the lawsuit says.
Union Line Farms alleged that the companies curtailed production and idled available capacity, delayed or limited production expansions despite record-high prices, managed inventory in a manner that maintained artificial scarcity, and ensured no companies “meaningfully” expanded output due to price increases.
“In a competitive market, record-high prices would have triggered a rapid and sustained supply response. That did not occur here,” the lawsuit says, with the companies instead maintaining “capacity discipline” to ensure supply in each market remained tight, even as prices rose to historic highs.
“This ‘managed scarcity’ was not an accident,” the suit alleges, and “defendants in each market agreed to reduce supply.”
The companies have not responded yet to either lawsuit as of Thursday.
Not the First Time
American Soybean Association, National Corn Growers Association and other organizations recently sent a letter urging fertilizer manufacturers Mosaic and Simplot to withdraw support for countervailing duties on phosphate fertilizer imports from Morocco and Russia that they contend is driving up input costs for farmers.
The two lawsuits do not represent the first time the fertilizer industry has been targeted in private litigation and through government enforcement for unfair business practices, the Union Line Farm lawsuit notes.
In the early 1990s, several potash producers were the subject of a price-fixing investigation by the DOJ’s Antitrust Division. In 2008, a class-action lawsuit was filed on behalf of purchasers of potash, alleging various worldwide producers restricted output to increase prices.
Mosaic, PotashCorp. and Agrium agreed to pay nearly $100 million to settle the claims.
