Hearings to examine Perspectives on the Fertilizer Industry

Thank you all of you very much for being here today. As we all know, this hearing is about, is being held during what continues to be a very precarious time across America's agriculture economy. I would call that an understatement. i would say it's a generational event while input prices for our producers have been stubbornly high for the past several years this situation has recently become more acute as farm bankruptcies increase fuel prices remain high and interest rates have yet to come down the cost of fertilizer the topic of today's hearing has also gone up and i look forward to hearing from our witnesses about the current state of the fertilizer industry how these high prices directly affect our producers and what potential solutions exist for congress to ensure a stable affordable supply of this uh important crop input again this is a national security issue this isn't a simple problem to address this fertilizer is not a single uniform input nitrogen phosphate potassium commonly referred to as n p and k present a complicated picture of global supply chains that have been affected by the war in Ukraine, trade disputes that have also resulted in countervailing duties, and the recent conflict in the Middle East. Today's hearing is an important opportunity to learn more about how these factors and others directly impact producers' cost. I want to commend the Trump administration for the attentions it's given to high fertilizer prices over the last couple of months the administration has responded by waiving the jones act and refocusing refocusing the fertilizer product expansion program to insure projects funded under this program are up and running as soon as possible in november us department of interior secretary doug bargam also announced the addition of phosphate and potash to the crucial minerals list, which will streamline regulatory hurdles and increase domestic production of these fertilizer inputs. These minerals important, these minerals important to food security, which is national security, were clear, and this was a welcome and much needed change. US Department of Ag- of S- Ag- Agriculture Secretary Rollins has continued to engage with our producers in brought together her colleagues from across the administration to determine what additional steps they can take to provide relief. Several members of this committee have also proposed legislative solutions to address higher fertilizer prices. And I welcome hearing from our witnesses about those proposals, uh, how they may help and what additional act actions Congress and the administration might take to ensure a reliable an accessible affordable supply of fertilizer for hardworking american farmers. With our colleagues in the house successfully passing a bipartisan farm bill two point O I look forward to engaging with the members of this committee on what we learned today to ensure a senate version addresses the urgent needs of agriculture. Congress those are nation's producers in the updated farm bill that will complement the improvements we made in last year in the one big beautiful bill and I'm committed to making that happen. While the proposals and solutions we hear about today may help increase production of fertilizer and bring down prices, in the long term, in the immediate future, Congress must provide additional assistance to supplement what USDA provided with the farmer bridge payments and the assistance for specialty crop uh, farmers' programs. to ensure producers have the working capital capital available to see them through the twenty twenty six uh crop season. i've been working with my friend senator hoven to advocate for this assistance and appreciate president trump's acknowledgement of this need when a larger supplemental funding package is requested before i turn it over to ranking member Klobuchar for opening statement i ask unanimous consent the statements sent to the committee for this hearing be included in the record, including an op-ed written by USDA Secretary Rollins and a statement submitted to the committee by Deputy Secretary Biden. Without objection, so ordered. Again, I thank my colleagues and our witnesses for being here today. And with that, I now turn to Ranking Member Klobuchar for her opening statement.

Thank you very much, uh, Chairman Bozeman, and thank you for holding this important hearing today and for bringing such distinguished witnesses and particularly i would particularly i would mention the farmers who have uh come to washington in the middle of planting season uh to share their perspective so thank you for doing that including a number from minnesota as we hear from our witnesses today um i would say that farmers need policies that encourage new investment reduce supply disruptions and improve transparency in the fertilizer market. We know there are many reasons that fertilizer prices are astronomically high. They were high before the war started, but I will note that there is a direct link uh between recent escalations and this war. In the months since the president started the war with no consultation or authorization from Congress, fertilizer prices uh urea has spiked more than forty percent uh the cost of diesel has hit near record highs in midwest states now why will nearly half of the global urea go through the straits of harmuz thirty percent of ammonia goes through the straits of harmuz yet even before the war farmers were walloped by the presence across the board tariffs an analysis by north dakota state university ok found that iepah tariffs you might not like that ok ok go bison here's what it found ok

boy

it's something to deal with everyday

i know found that iepah tariffs added nearly one billion in cost to critical inputs like fertilizer seed machinery and chemicals from february through october of last year i was at the supreme court argument and as you are well aware the supreme court found the tariffs illegal and last week uh the court of international trade ruled against the president authorities to use a different statue for these authorities for these tariffs and again they're not targeted they're across the board and it is a led to uh part of these problems just last month i was at a family farm in cannon falls minnesota where i met with corn and soybean farmers who are facing escalating causes planting season many of them said stubbornly high fertilizer prices have been an issue for years in a market with little competition some of them were able to lock in before the war not knowing it was gonna happen but others now are even in worse shape beyond the geopolitical challenges there are other reasons uh farmers have just a handful of domestic suppliers to choose from with little transparency about the prices that they ultimately pay In twenty twenty four, just four fertilizer companies accounted for seventy seven percent of U S nit nitrogen fertilizer sales and all domestic potash and phosphate. That's why I partnered with Senator Thune, who's here with us, and farmers in our state to introduce the Fertilizer Price Transparency Act to create a mandatory price reporting structure at USDA, to ensure farmers and co-ops have adequate market information on fertilizer components, especially at times when we see major supply chain shocks. We believe getting this uh information out there would be very helpful. Aside from price transparency, we need to increase domestic fertilizer production and storage. Senator Marshall, who's also with us, and I have introduced the Homegrown Fertilizer Act to do just that, so we can ease our dependence on import. And I know Senator Grassley and others on this committee have introduced other pieces of legislation to address these issues. Acting now will ultimately help stabilize prices and give farmers a certainty they need. But it is going to have to be a combination of things. Ending the tariffs or reducing them or making them much more targeted. Ending this war, finding a way to resolve it so the Straits of Hormuz is open again. and then going at this long-term systemic problem about the lack of competition in this area. Thank you to our witnesses today.

Um, thank you. We'll now introduce our witnesses. We're gonna go to Senator McConnell first to introduce uh our witness from Kentucky.

Thank you, Mr. Chairman. You know how politicians frequently refer to each other as my friend or my good friend. it's usually not true

sometimes

frequently we say that about some of our constituents i've got a prepared text here i'm gonna ask the chairman to put it in the record but i want to tell you about eddie melton we've been literally friends for decades we've worked together on issue after issue after issue for a big part of the forty two years i've been here he's bright as hell and is extremely creative example year or so ago he came to me and said i'm really really concerned as i'm sure we all are about the loss of farmland not only did he say he was concerned about it he had an idea about how to make it less likely to happen which is to give a tax relief proposal for people who bought a farm if they agreed to continue farming for at least ten years. I took that idea and put it in the big beautiful bill. It's law. If Eddie hadn't thought of that, it wouldn't have happened. So I can tell you he's made a difference, not only for Kentucky agriculture, but for agriculture all across the country. And I just want to come by Eddie and thank you for all you've done. Thank you, Mr. Chairman.

Thank you very much. Senator Klobuchar.

Thank you very much, Mr. Chair. Um, It is my pleasure to welcome Andy Green to the committee today. Mister Green is a partner in Center Market Strategies, a bipartisan firm dedicated to keeping markets fair and ensuring a seat at the table for businesses of all sizes. He previously served as the first senior advisor for fair and competitive markets at the USDA during the previous administration where he spearheaded efforts to promote competitive markets across agriculture.

Senator Thun.

Thank you, Mr. Chairman, and and by the way, thank you for shining a light on this uh really important subject. I'm glad we're having this hearing. We need to get to the bottom of uh one of the uh biggest challenges farmers facing these days and that's the cost of inputs and particularly fertilizer. Um, it's my pleasure, Miss Chairman, to introduce to the committee, uh, Trent Kubik. And he is a, um, not only the current President of the South Dakota Corn Growers, but also a, uh, a farmer and a rancher, along with his wife and parents. They farm near Hamel, South Dakota, uh, raise corn, soybeans, alfalfa, and milo, uh, alongside their cow-calf operation. And by the way, for any of you who've been to South Dakota, in that part of South Dakota they also have a very, very abundant pheasant supply. Um, but Trent graduated from South Dakota State University with a degree in agronomy. He and his wife, Shannon, have two sons. Uh, he stays very busy as a certified crop advisor. And, uh, as a volunteer,

Uh-huh.

FF, FFA and four H volunteer, and he's a very active member of his church. And I, I know also that he has a, uh, a person a man of great courage um because he is a a die-hard green bay packer fan in in in viking country um which is uh which is the distinction that we share uh by the way but i am very pleased to have him here today and look forward to hearing a south dakota perspective on this issue so trent welcome thank you mr. chairman

Mr. Rosenbusch, Corey Rosenbusch, serves as the Fertilizer Institute's President and CEO, where he's responsible for leading efforts to advance the fertilizer industry. Before joining TFI, uh, Mr. Rosenbusch served as President and CEO for the Global Cold Chain Alliance, and worked for the Borlaug Institute. Uh, Mr. Rosenbusch holds a degree in International Development. from harvard university and a bachelor of science degree in agriculture education from texas a and m that's a combination and we appreciate you being here very very much uh senator fisher

thank you mr. chairman i am pleased today to introduce mr. joshua wesleyan who is here today as a witness for this committee on a very very important subject Mister Westling is leading the development of Project Meadowlark, a new fertilizer plant in Gothenburg, Nebraska. This facility is projected to produce five hundred, five thousand tons of liquid fertilizer and reach commercial operation, I'm afraid not until twenty twenty nine. But before working on Project Meadowlark, Mister Westling, he led the development and construction of an anhydrous ammonia plant in Geneva, Nebraska, that became one of the few greenfield nitrogen fertilizer facilities built here in this country. Mister Wesleyan, we are so happy to see you here today, and I look forward to your comments. Thank you.

Thank you. Uh, Mister Green, you're recognized.

Thank you, Chairman Bozeman and Ranking Member Klobuchar, for the opportunity to testify this afternoon. We are here because the American farmer is hurting. For more than five years, farmers have endured both price spikes and sustained higher prices, squeezing their margins and affecting their planting choices. It is well known that fertilizer markets are highly concentrated. Indeed, one relatively recent merger created a giant that controls six percent of one type of fertilizer and thirty percent of the market for another. Amazingly, Federal Trade Commission economists took a barely two years after its completion to say everything's fine. That was a mistake. So what are pillars of building fairer, more competitive fertilizer markets? First, enforcement. I'm pleased to see this administration has prioritized investigations in agricultural competition around both agricultural inputs and cattle markets. I hope their efforts yield fruit, and would be pleased if they were building on the groundwork laid out previously, for example, with the Agristats cl- case. High sustained increases in profits should also be cause for antitrust scrutiny, particularly in light of market shocks that are repeating today. To that end, it may be appropriate to reconsider those recent merger mergers that have helped form this highly concentrated sector. Effective enforcement of the law also requires funding and staffing at agencies including USDA. Second, more transparency would be beneficial for a more accountable fertilizer market. Kudos to the bipartisan sponsors of legislation to enhance USDA's role in providing additional transparency, uh, including, uh, in particular S forty-one fifty-two, the Fertilizer Transparency Act of twenty twenty six. Public reporting can, and in some cases, uh, can highlight, and in some cases deter, problematic trends. For example, where there's a disconnect between price and underlying supply and demand. In that way, transparency can lead to beneficial outcomes for farmers, even beyond their use of the information itself. I also commend the legislation for its use of modern dashboards. And the bill appropriately preserves the ability for the data to be used for enforcement purposes. Additionally, regular public company disclosures should be preserved and enhanced, as valuable for both investors and for farmers' risk management. Third, investment is an important tool for enhancing competitive markets. The fertilizer product, uh the fertilizer production was USDA's nine hundred million dollar commitment to support American-made sustainable fertilizer capacity in the face of similarly sharp uh sharply increasing prices and long-term trends towards concentration. Over the course of three years, FPEP invested over seven hundred and seventy-eight million dollars in more than one hundred projects across thirty-nine states. That adds up to an estimated twelve million tons of new production online and more than one thousand five hundred jobs. More than one hundred million dollars remains available to the program and more via the CCC. Funding for USDA's rural cooperative and business services and the agricultural marketing service are important for these types of efforts, and others that benefit more choices for farmers. Fourth, consumers can support pro-competition initiatives incentives upstream for farmers. Clear labels for consumers producers that actually do the hard work of delivering value-added products that consumers want. In fertilizer, opportunities may exist to align America's desire for healthy food and a clean environment with competition and resiliency in fertilizer. Expanding bio-fertilizer and nutrient recycling options for farmers should be part of the equation. Fifth and finally, economic research and academic legal analysis are foundational aspects of building and maintaining effective market competition. Government investment in objective, unbiased research, such as the land-grant university system, helps policymakers identify trends and design interventions to restore market competitiveness. I want to particularly highlight the importance of research into seed resiliency. New varieties can help support more efficient fertilizer choices. To that end, special attention should go to ensuring the maintenance and staffing for the Agricultural Research Service's national plant germplasm system to avoid the loss of irreplaceable genetics, including in corn. In conclusion, more can and should be done on a bipartisan basis to enhance competition in the fertilizer sector so that America's farmers can compete based on hard work, smart investments, and nature's abundance. Thank you very much.

Thank you, uh, Mister Kubik.

Chairman Boesman, Ranking Member Klobuchar, and members of the Senate Agricultural Committee. Thank you for the opportunity to speak here today. My name is Trent Kubik. I'm a farmer from Hamel, South Dakota, and President of the South Dakota Corn Growers Association. I farm in an area of the country where weather varies much more than normal, and more often than not we are threatened by lack of rainfall. Due to this, we try and limit the amount of fertilizer we purchase and apply at the start of the year to determine if we need more while the crop is growing, which in turn does not allow us to early book and or prepay all of our fertilizer needs. In the first few months of this year we were not in a, in a position to book or prepay for any fertilizer, so we expected our costs were gonna be higher than normal as we'd be purchasing closer to peak demand season. But now we are left with costs nearly doubling. This leads me to ask what is causing fertilizer to increase in price? Despite the cost of natural gas in the US being relatively cheaper than any fertilizer producing area in the world, the price of nitrogen fertilizer in the US has continued to rise in concert with prices in with prices in areas with higher costing natural gas. A resulting rise in margins for US manufacturers should, in theory, encourage expansion of production in higher capacity utilization for the industry. Instead, Market Power has allowed manufacturers to maintain higher prices at the expense of the US farmer. In fact, last week a Bloomberg article showed the recent earning reports indicate record profits for fertilizer companies. When my input price goes up, my profit margin shrinks. And I'll be frank, it's unclear to corn farmers in South Dakota how the opposite is possible for the fertilizer industry. What I do, what I do now is, is that profit increase illustrates an industry that does not have that does not have to increase my fertilizer prices, but can do so. In my written testimony, I also included analysis that indicated the use of market power to directly impact fertilizer pricing an analysis conducted in twenty twenty four illustrated the producer price index measuring the change in price of goods sold, both for corn and nitrogen, indicating that nitrogen fertilizer prices nearly precisely tracked increases in corn prices what what is the structure of this marketplace over the past forty years, fewer and fewer fertilizer firms serve the us farmer do in no small part to industry mergers by almost any major measure these are highly concentrated markets in addition large manufacturers appear to have developed and to own distribution networks for instance Nutrien operates the largest director grower distribution network with distribution points and retail locations but unfortunately there is limited publicly available information regarding distributors and and wholesalers it is important to note that vertical integration has not led to the efficiency gains passed on to growers and consumers Instead, our experience is that the integration has resulted in the largest fertilizer companies locking up and leveraging distribution channels, entrenching their dominant position, and extracting excessive profits from farmers and consumers. Market power allows even the simple act of storing these products to be turned against the farmer. For instance, it is my understanding that the fertilizer manufacturers are able to park barges of product and hold on to inventory. In addition, under a scenario where there are only two market participants, the first market participant could set the price for a barge of fertilizer with the second following at that price. It is easy to see how this might occur. We also need the ability of manufacturers to exert pressure downstream on wholesalers and retailers to be mitigated. As I've already mentioned, there's not significant amounts of information available to the public about wholesalers. I have heard credible reports of practices that undoubtedly could affect farmers, such as the delay in availability of fertilizer booked by a retailer, but it is difficult to assess what is really happening Due into the opaque due to the opaque nature of parts of that supply chain. Two key pieces of legislation would be helpful to begin to provide the type of data data needed to assess the use of market output control. The Fertilizer Transparency Act of twenty twenty six would increase the data available to help improve market signals by providing public access to meaningful pricing data and give farmers a tool to help plan for these costs. Ultimately, this legislation will make the market for key farm inputs more transparent and therefore represent a step toward making the market more competitive. It also may help to pr- provide it also might help provide data that would aid analysis of whether market control has been used to limit the supply of fertilizer. We greatly appreciate South Dakota John Senator John Thune and ranking member Klobuchar for introducing this much needed step towards market transparency. In addition, the Fertilizer Research Act authorizes a study on fertilizer competition, trends, and pricing. This bill also increases transparency and and would provide a much needed information to better assess the marketplace, including key data such as sector's capacity utilization rates, And we thank Senate Judiciary Chair Chuck Grassley and Senators Tammy Baldwin for introducing this bill. Simply put, farmers need more competition in this marketplace. We thank the US Department of Ag Deputy Secretary Stephen Baden for his significant interest in this area, and call upon the federal agencies that signed the September twenty twenty-five Memorandum of Understanding to take meaningful steps towards solutions to concentration in this subsector. Federal antitrust laws exist for for precisely this reason, to promote and sustain competition, the lifeblood of our economy. Increased competition for more participants in the in the fertilizer manufacturing space is the only thing that can deliver meaningful and durable price relief. Thank you again for the opportunity to be here and thank you to Chairman Bozeman and Ranking Member Klobuchar for taking up such a critical issue of fertilizer. I look forward to your questions.

Thank you very much uh, Mister Melton.

Chairman Bozeman, Ranking Member Klobuchar, members of the Senate Ag Committee. My name is Eddie Melton and I'm a fifth generation row crop and beef cattle farmer from Webster County, Kentucky. I currently serve as President of Kentucky Farm Bureau. It's an honor to be with you today to speak on behalf of the farmers of Kentucky, as well as the four hundred and seventy thousand Kentucky Farm Bureau member families. My family has been farming in Webster County since nineteen hundred when my great great grandfather purchased our farm. During my lifetime I've helped bring in more than fifty years of crops. We typically raise corn, soybeans, canola, wheat, and beef cattle. My business partner, Patrick Howard, and I made a decision last August to not plant wheat and canola due to the increased fertilizer price. This is the kind of decisions the farmers ac- across the country have had to make. This hearing comes at a critical time, uh, as we assess the current state of the farm economy and the ongoing challenges facing American agriculture. Today's fertilizer price challenges do not begin with the recent conflict in Iran. While global tensions often draw attention to input markets, prices for fertilizer have been elevated for years. Though the current crisis is not new, disruptions in the Strait of Hormuz have beyond a doubt exacerbated the problem. The shipping disruptions contributed to an increase in the price of nitrogen fertilizer. The unpredictability in the region has led to concerns and about availability, not for just this current crop year, but also for next year as well. Since February, we have seen a thirty-three percent rise in anhydrous prices, a fifty-five percent rise in urea prices, and a twenty-five percent increase in liquid nitrogen. All the while, corn prices have declined from seven dollars a bushel in twenty-twenty-two, to approximately four dollars and fifty cents per bushel today. Meanwhile, many farmers are operating with little or no working capital, limiting their ability to manage risk, or invest in future production. In the first quarter of twenty twenty-six, eighty-six farms have already filed for chapter twelve bankruptcy, including twenty-five of those in the southeastern region. Last month, American Farm Bureau Federation conducted a fertilizer availability survey of more than fifty-seven hundred farmers and ranchers nationwide. The results highlight significant challenges in fertilizer access. Affordability challenges are especially acute in the South, with roughly seventy-eight percent of the respondents indicating that they uh were unable to afford all the fertilizer they need. In my home state of Kentucky, just twenty-nine percent of farmers were were reported to be able to pre-book fertilizer with almost seventy-two percent stating that they could not afford all the fertilizer that they needed this growing season. Addressing these challenges requires both immediate and long-term action. In the near term, greater transparency in the fertilizer market and ensuring farmers have access to the fertilizer they need to get through this growing season is essential. We appreciate the efforts of the administration so far, but we continue to call on the President and Congress to do everything in their power to increase availability of fertilizer and ease the price burdens on farmers this growing season. Over the longer term, must strengthen its domestic fertilizer production capacity. We are grateful to the administration, especially Secretary Rollins and the team at USDA for the work on this issue. Expanding domestic production would improve supply reliability and help moderate place volatility over time. These challenges facing agriculture today are the result of sustained economic pressure that is reshaping the farm economy. According to the last USDA census, we lost more than twenty million acres of farmland and almost two hundred thousand farms nationwide. If farm closures and farmland loss and consolidation continue, the long-term structure of American agriculture will begin to change. Ensuring the producers have access to affordable inputs and fair transparent markets is critical, not only for their operations, but for the long-term stability of American agriculture and national food security. For producers operating on thin margins, there is no flexibility to wait for longer-term solutions. That is why near-term support matters. Congress should act now with additional economic assistance to help farmers manage today's cost pressures, prevent further financial strain, and stabilize operations while longer-term fixes are put in place. Chairman Bozeman, Ranking Member Klobuchar, and members of the committee, thank you for the opportunity to speak to you today. as both a farmer and as president of Kentucky Farm Bureau. This committee's work is so important to agriculture and the farm economy to ensure the reliable supply of food, fiber and fuel for generations to come. Thank you.

Thank you, and Mister Rosenbusch.

Thank you, Chairman Bozeman, Ranking Member Klobuchar, members of the committee. The Fertilizer Institute represents manufacturers, importers, wholesellers and retailers who serve America's farmers. There are over five hundred producers of fertilizer globally, and the United States is one of three countries that has more than twenty unique companies producing fertilizer. Half of all the crop yields in the world today are only possible through the use of these crop nutrients. And thank you, farmers, because without farmers there would be no fertilizer industry. Uh, I grew up in a small Texas town where my dad was my FFA advisor, and it was really FFA that broadened my horizons to leave rural America and move to Indonesia, where I spent three years helping smallholder farmers. And it was really that experience that shaped my view on agriculture. Whether you farm in Indonesia or in Iowa, farmers are highly exposed to global markets. And fertilizer is one of those global markets, which is not a single product, but they are typically represented by three macronutrients, nitrogen, phosphate, and potash. each with own with its own unique market dynamics. The United States does have significant production of nitrogen and phosphate. And while we do have some potash production, we import over ninety eight percent. The US only accounts for seven percent of total global fertilizer production, and we are a net importer of fertilizer. Over ninety percent of all fertilizers applied in the world are actually used outside of the United States. We also have one of the world's most sophisticated logistics systems to enable large-scale delivery of fertilizer. That infrastructure helps support strong competition and options for farmers from both domestic and international suppliers to the market. So, please hear this. Fertilizer is a globally traded commodity that is subject to fierce competition in global supply and demand. To understand that supply and demand, We really have to begin with geopolitics, starting with Iran. The closure of the Strait of Hormuz impacted about thirty-four percent of globally traded urea, twenty percent of phosphate, and half of the world's sulfur exports. Iran itself is actually the second largest exporter of urea, with about twelve percent of the market place. Twenty percent of the natural gas is supplied from the region, and natural gas is the feedstock, of course, for all nitrogen fertilizer. But the Strait is really only part of the story. There have been thirty-one ammonia plants in the region that have curtailed production, or have been damaged during the conflict. Another forty-nine plants in India and South Asia were also shuttered due to disruption of their natural gas supply from the region. So even with the Strait opening, reopening, we do not know the extent of the damage to those production facilities. These issues really just exacerbated what was already a very or sorry, tight global supply. China, who is the world's largest producer of fertilizer with about a third of all nitrogen production and forty-three percent of the global phosphate supply, are currently restricting all of their exports. Twenty Russian nitrogen plants have been damaged due to Ukrainian drone strikes, and Russia also has implemented an export ban on their fertilizer, or restriction. So, with At the same time, we're also experiencing strong demand for fertilizer. For example, in India, the world's second largest consumer of fertilizer behind China, their federal government procures their fertilizer. They then heavily subsidize it to keep it, keep prices low for their farmers. Because a significant volume of Ind- of urea was stranded behind the strait, India recently did another urea tender for two point five million metric tons of urea at nearly a thousand dollars per metric ton. We recognize that this is a very challenging and frustrating time for our farmers that are already experiencing very low crop prices. And that's why we'd like to be a partner, to develop solutions. In the interest of time, I'll refer to my written testimony for some of those solutions, but we support policies that bolster domestic supply. Ammonia facilities can take more than five years and cost four to five billion dollars to build, or a decade or more for development of a potash or phosphate mine. We also support transparency. Farmers need a reliable source of data and market information. We have proposed the creation of a crop input economist at USDA that can analyze price information and supply uh supply factors to aid farmers in their decision making. But even with these policy solutions, I wanna be clear that fertilizer is a globally traded commodity. So while we cannot directly influence prices, we can produce productive policies to bolster domestic supply that mitigates geopolitical risks for the American farmer. Thank you.

Thank you, uh, Mister Westling.

Chairman Boseman, Ranking Member Klobuchar, members of the committee, thank you, and Senator Fisher, thank you for the introduction. My name is Joshua Westling. I'm the founder and CEO of Jay Westling and Company, and I am leading the development of Project Metal-Ark, a new domestic fertilizer complex in Gothenburg, Nebraska. I am the only developer of new domestic fertilizer capacity testifying today, and I wanna give you a candid view from the front line. Six years ago, I started working on this project because the fertilizer supply supply problem in our region was getting worse, and nobody was solving it. Nebraska is consistently one of the largest agricultural markets in the United States, with farm cash receipts approaching forty billion dollars annually, and we are one of the largest markets for UAN and ATS in the country, yet local production of nitrogen fertilizer is minimal relative to what we consume. The cost of moving fertilizer to where it is needed and the consequences when it doesn't arrive on time are borne by our farmers. Very often, they are also exposed to supply disruptions, thousands of miles away from their operations. Project Metal-Arc helps change that. Once it reaches commercial operation in two thousand twenty nine, it will produce three hundred and sixty-five thousand tons of UAM per year, a hundred and forty thousand tons of ATS, and fifty-two thousand tons of diesel exhaust fluid. The plant is fully integrated. We produce ammonia as an intermediate, but every pound is converted onsite into products our farmers and truckers actually use. This is the second greenfield nitrogen fertilizer plant I will have developed. When fertilize, when Fortigen came online in two thousand eighteen, it was one of the only three greenfield nitrogen fertilizer plants of meaningful scale built in the United States in over thirty years. Project MetalArk will be the fourth. My team and I have done this before. The total budget for this project is over one billion dollars. We have raised over fifty million in pre-development capital to date, the substantial majority from regional investors, farm aligned partners, and members of our community. These are the people who understand the supply problem most directly, because they live it every season. They have always believed the federal government should have a role in solving this problem but they also recognize the government often acts only in response to crises so they took the initiative I am honored and humbled by their support, I take very seriously the responsibility of delivering what we say we will deliver. When farmers are putting their own capital into restoring domestic fertilizer production, that is essential to our nation's farm and food security, that is rural America trying to tell you something. One challenge unique to fertilizer projects is that so little domestic nitrogen capacity has been built in the United States over the past several decades. Unlike sectors such as power generation or data centers, there are relatively few recent reference projects for institutional investors, lenders, engineers, and contractors to rely upon. As a result, substantially more diligence, engineering work and development capital are required before large scale, private capital can move with confidence. Early stage funding, through any number of mechanisms, is one of the biggest areas of opportunity for any capital deployment program you are pursuing. I support the framework announced on April twenty ninth, by Secretaries Rollins, Luttnick and Burgum, Administrator Zeldin, Director Hassett and others. It is a serious response to a serious problem, and this committee's bipartisan engagement is exactly what this moment requires. If domestic fertilizer production is truly a strategic infrastructure, then we need to finance and permit it like strategic infrastructure. I wanna use my remaining time to highlight three additional steps that would meaningfully strengthen American farm and food security. First, predictability and execution certainty. If domestic fertilizer capacity is truly a strategic priority, then federal timelines must operate with the s- with the urgency that this priority requires. Clear and predictable timelines allow private capital to move faster and strategically important projects to come online sooner. Second, coordination across agencies and programs. Large industrial projects move through multiple federal processes simultaneously. When agencies operate independently, delays compound and timeline stretch unnecessarily. Better coordination would materially accelerate the deployment of private capital into strategically important domestic capacity. Third, urgency. If Congress and the administration believe domestic fertilizer production is critical to American food and national security, then we should act like it. Every year of delay is another planting cycle exposed to fragile supply chains and foreign dependency. Projects like ours are ready to move. The faster strategic federal support becomes real and deployable, the faster new domestic ca- capacity comes online. Three years from now, the measure of success will not be how many frameworks were announced or how many hearings were held. It will be whether new domestic fertilizer capacity actually came online in the United States. This committee has the opportunity to help ensure that projects like ours move fast enough to matter. i'm grateful for your attention to this issue and for the bipartisan seriousness, this committee has brought to the problem. look forward to your questions and thank you.

thank you uh very much we're gonna go to our round of questions and uh i'm gonna allow senator thune to take my place in the order uh we appreciate uh the fact that even though he is the majority leader he is one of our most active members

thank you

he hasn't forgotten his roots

thank you mr. chairman uh and you can you can count on that uh and thank you again for your leadership on this and senator klobuchar for taking on this issue and and let me i'd be remiss if i know this isn't the subject here but uh we need to get e fifteen done and um that solves a couple of important problems one one of one of which one of which is demand for corn in this country at a time when we're losing some of our export markets and secondly increasing the supply of fuel in this country at a time when gas prices are going up. So, as an economic matter, it makes all the sense in the world. So, I I deviate and I understand, and thank you for your indulgence on that subject. But I wanna thank all of our panelists uh for being here today, and uh for sharing your thoughts on the impact of fertilizer prices and supply chains on the ag economy. These high input costs, adverse weather conditions, low commodity prices all impact our our ag economy and it's important that Congress continue its work toward long-term solutions that And I am very proud of what we did last summer in the working families tax cuts to increase reference prices for ARC and PLC, uh, improve crop insurance protection and update disaster programs. But I will say there is, there remains more to be done and all of the members of this committee know that rising input costs have been eating into producers' bottom lines over the last several years, particularly, I would add, the uh price of fertilizer. Uh, the steep increase would uh, the steep increase I should say would shrink or altogether eliminate any growers' profit margins, even during times of strong commodity prices. So it needs to be addressed. Mister Kubik, would you elaborate on how the price you have paid for nitrogen and phosphate fertilizers changed over the last several years and how those changes have impacted your planting decisions over the last few years?

Yeah, thank you. Thank you, Senator, for that question. Um, I did go back and look from from twenty twenty to twenty twenty six, kind of where the trends of fertilizer are. I got a little bit of PTSD from twenty twenty two. i'll be honest and i must have blocked it out of my memory um cause i can't believe we paid that much for fertilizer in twenty twenty two but just for reference uh in twenty twenty my farm paid three hundred and fifty five dollars for a ton of urea by the time twenty twenty two hit that price jumped to eight hundred and thirty dollars little bit of retract in twenty twenty three and twenty twenty four to four and five hundred dollars six hundred dollar range which at the time doesn't take a sharp pencil to to figure out that that's it's not sustainable and and we can't be profitable at those levels Um, and then, when you look at uh, if we look at phosphate, so Map four thirty five a ton in twenty twenty jumped to eleven hundred dollars a ton in twenty twenty two and it stayed consistently high, came off that high of twenty twenty two but stayed in the seven to eight hundred dollar range consistently for the last, four to five years. That has changed, so we applied it, we've we've applied less because of it, and in a actually in twenty twenty five we did not apply any phosphate on our farm, because it just did not make economic sense for us. And we're taking the risk that hopefully in the coming years it'll get cheaper and we can catch up. Um. so we've dealt with this for a long time and then when we have um world events that happen that um completely um completely blow that up and and really exacerbate the the problem um we we feel it so um this has been a long-standing problem for a long time

yeah and and it and it predates current events but nevertheless i mean it's this is contributing but i uh this is something that's going back a long ways and there are some structural things i think here that need to be addressed which is why we have some of these transparency bills could you just very quickly share your experience with uh the recent shortage is in particular the shortage of nitrogen in south dakota

uh i'll be honest senator we have not experienced a shortage of nitrogen yet

ok

um for our for our spring needs of nitrogen fertilizer has been there a lot of this stuff was in place and in country long before the events around the world happened and so um they went up in price significantly the the product that was here so we we do have a product we're starting to get concerned about what do we do in crop as our crop is growing it needs more fertilizer and as we look towards twenty twenty seven it's a real concern

as we know there are small number of manufacturers who have the lion's share of domestic fertilizer production. Um, so I would like to ask this question to Mister Rosenbusch, uh, in the United States, what percentage of sales for potash, i- nitrogen and phosphorus respectively, uh, to US retailers come from manufacturers other than the largest companies?

Thank you, uh, Senator, for that - for that question. um each market is very different so i'll start with potash um potash only about two percent of our domestic manufactured product uh represents the market here uh when you look at nitrogen again it depends on each of the different products uh ammonia we have uh a large percentage of of us domestic producers we have eighteen different companies that make up about eighty percent of that and then when you get to phosphate about sixty percent of our domestic uh manufacturers represent the the market share in the united states the other forty percent is imported product so it depends on each of those and when you think about the total uh market for the united states it's not just the domestic produced product but it's also the imported product that we need to to serve all the farmer's needs

miss chairman my my time has expired but i'm i'm if i can i would like to submit a couple of questions for the record so

Not objection.

Thank you.

Senator Klobuchar.

Thank you very much, uh, Mister Chair. Uh, Mister Kubik, in March, uh, Leader Thune and I introduced, uh, the bill I mentioned that would create a mandatory price reporting system, uh, for price transparency of, uh, fertilizer components. Um, could you talk about how price transparency in the fertilizer market helps farmers like yourself gain insight into the market and can make informed financial decisions and how is it helpful during the current market volatility we find ourselves in