Natural Gas
Domestic Nitrogen Fertilizer Production Depends on Natural Gas Availability and Prices Gao ID: GAO-03-1148 September 30, 2003Natural gas is the most costly component used in manufacturing nitrogen fertilizer. Therefore, when natural gas prices increased in 2000-2001, U.S. companies that produce nitrogen fertilizer reported adverse financial consequences resulting from much higher production costs. Concerns also arose that the nation's farmers would face much higher nitrogen fertilizer prices and that there might not be an adequate supply of nitrogen fertilizer to satisfy farmers' demands at any price. Responding to congressional concerns, GAO undertook a study to determine (1) how the price of natural gas affects the price, production, and availability of nitrogen fertilizer and (2) what role the federal government plays in mitigating the impact of natural gas prices on the U.S. fertilizer market.
Higher natural gas prices have contributed to higher nitrogen fertilizer prices and reduced domestic production. The following figure shows the relationship between natural gas prices and the farmer price for nitrogen fertilizer. Higher gas prices in 2000-2001 also led to a 25 percent reduction in domestic production of nitrogen but, despite this decline, the supply of nitrogen fertilizer was adequate to meet farmers' demand in 2001. Demand was met because U.S. nitrogen production was supplemented by a 43 percent increase in nitrogen imports and a 7 percent decrease in agricultural consumption of nitrogen fertilizer. The federal government does not set natural gas prices, and it has a limited role in managing the impact of natural gas prices on the U.S. fertilizer market. Three federal agencies--(1) the Federal Energy Regulatory Commission, (2) the Commodities Futures Trading Commission, and (3) the Energy Information Administration--are responsible for ensuring that natural gas prices are determined in a competitive and informed marketplace. Moreover, the federal government has no role in controlling fertilizer prices, but the U.S. Department of Agriculture (USDA) does monitor developments in the agricultural sector, including fertilizer markets, that could affect farmers. Also, in 2001, USDA collected additional survey information in response to concerns about the price and availability of nitrogen fertilizer.
GAO-03-1148, Natural Gas: Domestic Nitrogen Fertilizer Production Depends on Natural Gas Availability and Prices
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Report to the Ranking Democratic Member, Committee on Agriculture,
Nutrition and Forestry, U.S. Senate:
September 2003:
NATURAL GAS:
Domestic Nitrogen Fertilizer Production Depends on Natural Gas
Availability and Prices:
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-03-1148] GAO-03-
1148:
GAO Highlights:
Highlights of GAO-03-1148, a report to the Ranking Democratic Member,
Committee on Agriculture, Nutrition and Forestry, U.S. Senate
Why GAO Did This Study:
Natural gas is the most costly component used in manufacturing
nitrogen fertilizer. Therefore, when natural gas prices increased in
2000–2001, U.S. companies that produce nitrogen fertilizer reported
adverse financial consequences resulting from much higher production
costs. Concerns also arose that the nation‘s farmers would face much
higher nitrogen fertilizer prices and that there might not be an
adequate supply of nitrogen fertilizer to satisfy farmers‘ demands at
any price. Responding to congressional concerns, GAO undertook a study
to determine (1) how the price of natural gas affects the price,
production, and availability of nitrogen fertilizer and (2) what role
the federal government plays in mitigating the impact of natural gas
prices on the U.S. fertilizer market.
What GAO Found:
Higher natural gas prices have contributed to higher nitrogen
fertilizer prices and reduced domestic production. The following
figure shows the relationship between natural gas prices and the
farmer price for nitrogen fertilizer.
Farmer Price for Nitrogen Fertilizer Relative to Natural Gas Prices,
January 1998–March 2003
[See PDF for image]
[End of figure]
Higher gas prices in 2000–2001 also led to a 25 percent reduction in
domestic production of nitrogen but, despite this decline, the supply
of nitrogen fertilizer was adequate to meet farmers‘ demand in 2001.
Demand was met because U.S. nitrogen production was supplemented by a
43 percent increase in nitrogen imports and a 7 percent decrease in
agricultural consumption of nitrogen fertilizer.
The federal government does not set natural gas prices, and it has a
limited role in managing the impact of natural gas prices on the U.S.
fertilizer market. Three federal agencies”(1) the Federal Energy
Regulatory Commission, (2) the Commodities Futures Trading Commission,
and (3) the Energy Information Administration”are responsible for
ensuring that natural gas prices are determined in a competitive and
informed marketplace. Moreover, the federal government has no role in
controlling fertilizer prices, but the U.S. Department of Agriculture
(USDA) does monitor developments in the agricultural sector, including
fertilizer markets, that could affect farmers. Also, in 2001, USDA
collected additional survey information in response to concerns about
the price and availability of nitrogen fertilizer.
www.gao.gov/cgi-bin/getrpt?GAO-03-1148.
To view the full product, including the scope and methodology, click
on the link above. For more information, contact Jim Wells at (202)
512-3841, wellsj@gao.gov.
[End of section]
Contents:
Letter:
Results in Brief:
Background:
Higher Natural Gas Prices Have Contributed to Higher Nitrogen
Fertilizer Prices and Reduced Domestic Production but Have Not Affected
Availability of Fertilizer:
Federal Government Has a Limited Role in Managing the Impact of Natural
Gas Prices on the Fertilizer Market:
Observations:
Agency Comments:
Appendixes:
Appendix I: Objectives, Scope, and Methodology:
Appendix II: GAO Contacts and Staff Acknowledgments:
GAO Contacts:
Staff Acknowledgments:
Tables:
Table 1: U.S. Nitrogen Supply and Demand, June 30, 1996-2002:
Table 2: Average Corn Prices, 1996-2001:
Table 3: Average Costs of Materials Used per Acre on Corn Farms, 1996-
2001:
Figures:
Figure 1: Anhydrous Ammonia and Natural Gas Prices, 1998-2003:
Figure 2: Urea, UAN, and Natural Gas Prices, January 1998-March 2003:
Figure 3: Prices of Anhydrous Ammonia in the U.S. Gulf Port and Mid
Cornbelt Relative to Natural Gas Prices, January 1998-March 2003:
Figure 4: Farmer Prices for Nitrogen Fertilizer Relative to Natural Gas
Prices, January 1998-March 2003:
Figure 5: Nitrogen Fertilizer Availability, 2001:
Abbreviations:
CFTC: Commodity Futures Trading Commission:
EIA: Energy Information Administration:
ERS: Economic Research Service:
FERC: Federal Energy Regulatory Commission:
NASS: National Agricultural Statistics Service:
TFI: The Fertilizer Institute:
UAN: urea ammonium nitrate:
USDA: U.S. Department of Agriculture:
Letter September 30, 2003:
The Honorable Tom Harkin
Ranking Democratic Member
Committee on Agriculture, Nutrition and Forestry
United States Senate:
Dear Senator Harkin:
Nitrogen, the plant nutrient and fertilizer component most widely
applied by American farmers, is essential for maintaining the high
yields achieved for major crops such as corn, wheat, and cotton in this
country. Natural gas is a key component in the production of nitrogen,
and the cost of natural gas can account for up to 90 percent of
nitrogen fertilizer production costs. When natural gas prices in this
country increased in late 2000 and early 2001, U.S. fertilizer
producers reported financial losses resulting from the significant
increase in their costs of producing nitrogen fertilizer. These higher
production costs also made it difficult for U.S. producers to compete
with foreign nitrogen fertilizer producers, who could buy natural gas
at lower prices and export their products to the United States. At
about the same time, concerns arose that the nation's farmers would
face much higher nitrogen fertilizer prices--and even that there might
not be an adequate supply of fertilizer to satisfy farmers' demand at
any price. Such an outcome was considered possible if U.S. fertilizer
producers were forced to significantly decrease their production,
because in recent years domestic producers have supplied more than one-
half of the nitrogen fertilizer used by American farmers. According to
fertilizer industry officials, higher natural gas prices in 2003 are
again having a negative financial impact on the U.S. nitrogen
fertilizer industry, threatening to irreversibly cripple it.
In this context, you asked us to determine (1) how the price of natural
gas affects the price, production, and availability of fertilizer and
(2) what role the federal government plays in managing the impact of
natural gas prices on the U.S. fertilizer market. To address the first
issue, we examined government and industry price data pertaining to
natural gas and nitrogen fertilizer to determine how nitrogen
fertilizer prices, both major market
spot prices[Footnote 1] and retail prices paid by farmers, behaved when
the price of natural gas increased in 2000-2001 and again in early
2003. Specifically, we determined the extent to which a correlation
exists between the price of natural gas at the Henry Hub[Footnote 2]
and prices for three major types of nitrogen fertilizer products:
anhydrous ammonia, urea, and urea ammonium nitrate (UAN). We selected
these three products because they are widely used by American farmers.
We also examined data obtained from the Department of Commerce and
industry sources to determine how nitrogen fertilizer production
behaved when natural gas prices spiked in 2000-2001 and the results of
a U.S. Department of Agriculture (USDA) survey aimed at determining how
farmers reacted to higher fertilizer prices in 2001. To determine how
higher natural gas prices have affected the supply of nitrogen
fertilizer, we obtained the results of a second USDA survey aimed at
determining the availability of fertilizer. In addition, we analyzed
sources, supplies, and consumption of nitrogen from fertilizer years
1996 through 2002.[Footnote 3] To address the second objective, we
reviewed the responsibilities of federal agencies relevant to the
natural gas and fertilizer markets and their efforts to monitor and
collect information on these markets. We also reviewed relevant
documents provided by agriculture and fertilizer industry
representatives and interviewed these officials to obtain their views
on what actions, if any, the federal government should take to mitigate
the effects of high natural gas prices on the U.S. fertilizer market.
We performed our review from February through August 2003 in accordance
with generally accepted government auditing standards. A detailed
description of our objectives, scope, and methodology is contained in
appendix I.
Results in Brief:
Higher natural gas prices have contributed to higher nitrogen
fertilizer prices and reduced domestic production, but supplies of
fertilizer have been adequate during periods of high natural gas prices
in the past primarily because of increased imports. For example,
between January 2000 and January 2001, the average price of natural gas
increased by more than 300 percent, from $2.52 to $10.16 per mmBtu.
Because natural gas is the most costly component used in manufacturing
nitrogen fertilizer, the higher gas prices led to higher prices for
nitrogen fertilizer. For example, between January 2000 and January
2001, the U.S. Gulf Port spot price for anhydrous ammonia, one of the
most commonly used nitrogen fertilizers, increased by 144 percent, from
$119 to $290 per ton. Higher natural gas prices during 2001 led to
higher production costs for U. S. nitrogen fertilizer producers and
this in turn led to a 25 percent reduction in domestic nitrogen
production in 2001. Despite this significant decline in production, a
USDA survey found the supply of nitrogen fertilizer was adequate to
meet farmers' demand. According to this survey, conducted from April to
June 2001, while nitrogen fertilizer supplies were below normal early
in the year, they had returned to normal levels by June. Our analysis
shows that the demand for nitrogen fertilizer was met in 2001 because
(1) U.S. production was supplemented by an increase of about 43 percent
in nitrogen imports and (2) agricultural consumption of nitrogen
fertilizer decreased from 12.3 million tons in 2000 to 11.5 million
tons in 2001. According to industry officials, gas prices in 2003 are
again resulting in unacceptably high production costs and, as a result,
a decline in production levels is occurring.
The federal government has a limited role in managing the impact of
natural gas prices on the U.S. fertilizer market. Although the federal
government does not set natural gas prices, three federal agencies--(1)
the Federal Energy Regulatory Commission, (2) the Commodities Futures
Trading Commission, and (3) the Energy Information Administration--are
responsible for ensuring that natural gas prices are determined in a
competitive and informed marketplace. Moreover, the federal government
has no role in controlling fertilizer prices, and nitrogen fertilizer
products imported from other countries are generally not subject to
U.S. trade restrictions, such as quotas or tariffs. However, as part of
its overall mission, USDA monitors developments in the agricultural
sector that could affect farmers. Regarding the fertilizer market, USDA
collects information on fertilizer prices and, in 2001, in response to
concerns about fertilizer prices and availability, conducted two
surveys of the fertilizer market. These surveys showed that there was
no problem with fertilizer availability in 2001, and most farmers
surveyed did not reduce their use of nitrogen fertilizer.
Background:
Natural gas is a key feedstock in the manufacturing of nitrogen for
which there is no practical substitute. Manufactured nitrogen--also
known as anhydrous ammonia--is used as a fertilizer itself and is also
the primary building block used to manufacture all other nitrogen-based
fertilizers. Some of this nitrogen also is used for industrial purposes
such as promoting bacterial growth in waste treatment plants, making
plastics, and as a refrigerant. U.S. manufacturers supplied almost 14
million tons of nitrogen during fertilizer year 2002 and an additional
7 million tons were imported. Fifty-six percent of the total nitrogen
supply was consumed by U.S. agricultural demands. Since natural gas is
the most costly component of nitrogen, the profitability of the U.S.
nitrogen fertilizer industry depends, to a large degree, on the price
of natural gas in the United States. As we reported in December
2002,[Footnote 4] natural gas prices can be volatile, and small shifts
in the supply of or demand for gas are likely to continue to cause
relatively large price fluctuations. In addition to facing a volatile
natural gas market, which sometimes leads to price spikes, America's
nitrogen fertilizer producers must also compete in a marketplace where
many competitors pay much lower prices for natural gas. For example,
industry data show that recently, when the U.S. market price for
natural gas was $5 per mmBtu, lower gas prices were available to
nitrogen fertilizer producers in other parts of the world. The price of
gas in the Middle East was 60 cents per mmBtu; in North Africa, 40
cents; in Russia, 70 cents; and in Venezuela, 50 cents. According to
The Fertilizer Institute (TFI),[Footnote 5] fertilizer products operate
in a world market, and U.S. prices are influenced by numerous variables
other than the price of natural gas in the United States.
Higher Natural Gas Prices Have Contributed to Higher Nitrogen
Fertilizer Prices and Reduced Domestic Production but Have Not Affected
Availability of Fertilizer:
Because the cost of natural gas accounts for such a large percentage--
up to 90 percent--of the total costs of manufacturing nitrogen
fertilizer, nitrogen fertilizer prices tend to increase when gas prices
increase. When gas prices increased in 2001 and 2003, prices for
nitrogen fertilizers increased throughout the marketing chain. The
higher natural gas prices in 2001 also led to higher production costs
for the U.S. nitrogen fertilizer manufacturing industry and resulted in
a significant reduction in the amount of nitrogen produced in this
country that year. Despite this decline in the production of nitrogen,
supplies of nitrogen fertilizer were adequate to meet farmers' needs in
2001 primarily because of a significant increase in imported nitrogen.
Natural Gas and Nitrogen Fertilizer Prices Are Closely Related:
Higher natural gas prices have contributed to higher prices for
nitrogen fertilizer throughout the marketing chain. When gas prices
increased significantly in 2001 and 2003, spot market prices, as well
as the prices farmers paid for fertilizer, increased for all three
nitrogen-based products included in our analysis--anhydrous ammonia,
urea, and UAN. Further, the high prices seen in 2001 could have been
even higher, if the volume of fertilizer imports had not increased to
compensate for the reduction in domestic production of nitrogen. The
relationship between gas prices and fertilizer prices was the strongest
for anhydrous ammonia, at least in part, because anhydrous ammonia
contains the highest concentration of nitrogen of the three fertilizer
products--82 percent--and natural gas is by far the most costly
component used in manufacturing nitrogen. Anhydrous ammonia is the
nitrogen-based fertilizer used most often in the United States, and is
also the primary building block for urea and UAN. As shown in figure 1,
prices for anhydrous ammonia and natural gas prices moved closely in
relation to each other during the period from January 1998 to March
2003. When gas prices increased or decreased, the spot market price for
ammonia tended to follow the same trend. More specifically, both the
price of natural gas and the price of ammonia peaked in January 2001
and again in March 2003. Closer review of the data shows that the
monthly price of natural gas in January 2000 of $2.52 per mmBtu had
risen 1 year
later to $10.16 per mmBtu, an increase of 303 percent. Over the same
time period, the price of anhydrous ammonia rose from $119 per ton to
$290 per ton, an increase of 144 percent.[Footnote 6]
Figure 1: Anhydrous Ammonia and Natural Gas Prices, 1998-2003:
[See PDF for image]
[End of figure]
From January 1998 to March 2003, prices of urea and UAN also reflected
natural gas prices. However, as shown in figure 2, the relationship
between the two was not as close as that between natural gas and
anhydrous ammonia prices because urea and UAN contain considerably less
nitrogen than anhydrous ammonia: 46 percent and 32 percent nitrogen,
respectively. Because urea and UAN prices reflect lower nitrogen
concentrations, they did not always move in direct relationship with
natural gas prices. For example, in May 1998, urea prices increased to
$162 per ton, while gas prices remained basically flat.
Figure 2: Urea, UAN, and Natural Gas Prices, January 1998-March 2003:
[See PDF for image]
Note: UAN prices are shown in dollars per ton for a 32 percent nitrogen
solution.
[End of figure]
Moreover, the prices of nitrogen fertilizer can differ depending upon
how much further along the marketing chain prices are recorded. For
example, as shown in figure 3, the price for anhydrous ammonia in the
Mid Cornbelt, where this fertilizer is primarily used, was higher than
the price in the U.S. Gulf. This difference reflects the cost of
transporting the ammonia from the Gulf, where it is produced, to the
Mid Cornbelt. Also, changes in the price of nitrogen fertilizer can lag
behind changes in natural gas prices, depending upon where in the
marketing chain prices are recorded. For example, as shown in figure 3,
the price for anhydrous ammonia in the Mid Cornbelt peaked in February
2001--about 1 month after natural gas prices spiked that year. Other
increases and decreases in the price of Mid Cornbelt ammonia lagged
behind natural gas price changes on other occasions. We believe these
lags reflect the time associated with transporting the fertilizer from
its point of origin to the farmers who ultimately use the product.
Figure 3: Prices of Anhydrous Ammonia in the U.S. Gulf Port and Mid
Cornbelt Relative to Natural Gas Prices, January 1998-March 2003:
[See PDF for image]
[End of figure]
Retail prices for nitrogen fertilizer, or those prices paid by farmers,
also tend to rise sharply when natural gas prices increase. As shown in
figure 4, the USDA-reported farmer prices for nitrogen fertilizer
reflected the natural gas price spikes that occurred in January 2001
and March 2003. However, the 2001 spike in fertilizer prices lagged
behind the increase in gas prices by about 1 month. The February 2001
price for nitrogen fertilizer was about 79 percent higher than it was
the previous year.
Figure 4: Farmer Prices for Nitrogen Fertilizer Relative to Natural Gas
Prices, January 1998-March 2003:
[See PDF for image]
Note: Nitrogen fertilizer prices were calculated using USDA price
indices and the amount of nitrogen contained in anhydrous ammonia,
urea, and UAN.
[End of figure]
Furthermore, according to USDA data, the average U.S. farm-level price
for nitrogen fertilizer during the spring, when farmers' demand for
nitrogen fertilizer is the highest, tracked natural gas prices.
Specifically, the April monthly price for natural gas increased
approximately 84 percent from April 2000 to April 2001. Over the same
time period, the April farm-level price for anhydrous ammonia increased
76 percent from $227 to $399 per ton. By April 2002, gas prices had
decreased by 39 percent, and ammonia prices had dropped by 37 percent
from the previous year's level. In April 2003, the price of natural gas
was again higher, increasing by 48 percent, and the average farm-level
price of anhydrous ammonia followed this trend by increasing 49
percent. However, it is difficult to determine the extent of financial
harm farmers suffered because of increased fertilizer prices in 2001. A
USDA study directed at determining how corn farmers responded to higher
fertilizer prices in 2001 found that about 34 percent of the responding
producers of corn--a crop that requires large quantities of nitrogen
fertilizer--purchased a majority of their nitrogen fertilizer at prices
that were set prior to January 2001 and, therefore, were not affected
by the sharp rise in fertilizer prices that year. Further, these
producers were among the largest corn-producing farms and applied the
most nitrogen fertilizer per acre. Eleven percent of the corn producers
that responded to the USDA survey reported adjusting their nitrogen
application rates or practices in response to higher prices, and the
remaining 55 percent of respondents--generally smaller corn farms that
applied the least amount of nitrogen fertilizer--reported they took no
action in response to higher nitrogen fertilizer prices in 2001.
Higher Natural Gas Prices Had Financial Consequences for U.S. Nitrogen
Fertilizer Producers and Led to Reduced Production:
The sharp rise in gas prices in 2001 had financial consequences for the
U.S. nitrogen fertilizer manufacturing industry because of the sharp
increase in their production costs. These higher production costs,
which could not be recovered through higher fertilizer prices, led to
plant closures and a significant reduction in domestic nitrogen
production. According to industry data, several companies that
manufacture nitrogen fertilizer reported decreased revenues or
financial losses in 2001, and each cited higher natural gas prices as
contributing to or causing the financial consequences. For example, one
large interregional cooperative that produces nitrogen fertilizer for
U.S. farmers and ranches reported a loss of more than $60 million in
2001. The company's 2001 annual report cited high natural gas prices as
a primary reason for the financial loss.
Industry data obtained from the International Fertilizer Development
Center[Footnote 7] showed that between January 2001 and June 2003,
eight U.S. nitrogen fertilizer manufacturers permanently closed their
plants, and a ninth plant had not operated since 2001. Industry
officials also told us that natural gas prices in 2003 have remained
well above historic averages and are continuing to exact a financial
toll on the domestic nitrogen fertilizer manufacturing industry. These
officials cite the fact that, in June 2003, the U.S. industry was
operating at only 50 percent of capacity as evidence of this toll.
Further, they said the industry has suffered through several years of
extreme financial hardship, caused in part by higher gas prices driving
up production costs and foreign competitors who have access to less
expensive natural gas and, if gas prices in this country remain
relatively high, more U.S manufacturers are likely to curtail nitrogen
production, and some could permanently shut down their plants.
The production and consumption of fertilizer is often measured by the
amount of nutrient content in the fertilizer applied. For nitrogen
fertilizer products, the primary nutrient that is measured is nitrogen.
Manufacturers supply nitrogen that is consumed in both the agricultural
and industrial sectors. Table 1 below provides estimates of nitrogen
supply and demand in the United States over the last 7 years, including
the nitrogen nutrient content in fertilizer products consumed by the
agricultural sector. As the price of natural gas, the key component in
the manufacturing of nitrogen spiked in 2001, nitrogen production fell.
As shown in table 1, U.S. manufacturers produced 25 percent less
nitrogen in 2001 than in 2000.
Table 1: U.S. Nitrogen Supply and Demand, June 30, 1996-2002:
000 tons.
Producers beginning inventory; 1996: 2,415; 1997:
2,047; 1998: 1,799; 1999: 1,956; 2000:
2,585; 2001: 1,856; 2002: 2,468.
Production; 1996: 14,469; 1997: 14,593;
1998: 15,092; 1999: 14,634; 2000: 14,186;
2001: 10,583; 2002: 11,519.
Imports; 1996: 4,963; 1997: 4,497; 1998:
5,066; 1999: 6,114; 2000: 6,289; 2001:
8,978; 2002: 7,273.
Total supply; 1996: 21,847; 1997: 21,137;
1998: 21,957; 1999: 22,704; 2000: 23,060;
2001: 21,417; 2002: 21,260.
Consumption; 1996: 16,813; 1997: 16,965;
1998: 17,028; 1999: 17,270; 2000: 17,254;
2001: 16,373; 2002: 16,809.
Agricultural; 1996: 12,303; 1997: 12,352;
1998: 12,313; 1999: 12,452; 2000: 12,334;
2001: 11,535; 2002: 12,009.
Industrial; 1996: 4,510; 1997: 4,613;
1998: 4,715; 1999: 4,818; 2000: 4,920;
2001: 4,838; 2002: 4,800.
Exports; 1996: 3,292; 1997: 3,365; 1998:
3,390; 1999: 3,458; 2000: 3,442; 2001:
2,768; 2002: 2,945.
Producers ending inventory; 1996: 2,047; 1997:
1,799; 1998: 1,956; 1999: 2,585; 2000:
1,856; 2001: 2,468; 2002: 1,690.
Total demand; 1996: 22,152; 1997: 22,129;
1998: 22,374; 1999: 23,313; 2000: 22,552;
2001: 21,609; 2002: 21,444.
Sources: GAO analysis of Department of Commerce, Bureau of Census, and
TFI data.
Note: Total supply and total demand differ primarily because the
components are derived from several independent sources, as explained
in appendix I.
[End of table]
Imports Have Helped Maintain Availability of Nitrogen Fertilizer:
Despite the significant decline in domestic production of nitrogen in
2001, supplies of nitrogen fertilizer were adequate to meet farmers'
demand that year primarily because of an increase in imports. USDA
collected additional survey information from April to June 2001 to
determine whether farmers were facing problems in obtaining nitrogen
fertilizer. The results of this survey show that the supply of nitrogen
fertilizer was adequate to meet farmers' 2001 demand. As shown in
figure 5, while nitrogen fertilizer supplies were below normal in
several states in April 2001, they had returned to normal levels in all
but one state by June of that year. Nationally, nitrogen fertilizer
supplies were at 92 percent of normal levels in early April 2001, while
only 12 states reported supplies at less than 90 percent of normal
levels. Only two states--Pennsylvania and New Jersey--reported supplies
at less than 80 percent of normal levels. However, by early June
nitrogen fertilizer supplies were at 97 percent of normal levels
nationally, and all but one state reported supplies at 95 percent or
more of normal levels. By June 30, 2001, USDA officials concluded that
there were sufficient supplies of nitrogen fertilizer, and they stopped
the survey. Furthermore, USDA did not conduct a similar survey in 2003,
when gas prices and fertilizer prices again increased, because it was
unaware of any concerns about the availability of nitrogen fertilizer.
Figure 5: Nitrogen Fertilizer Availability, 2001:
[See PDF for image]
[End of figure]
The results of USDA's survey are consistent with our analysis, which
found that although domestic production of nitrogen declined 25 percent
in 2001, the overall demand was met primarily because imports increased
by about 43 percent. As shown in table 1, nitrogen imports increased
from 6.3 million tons in 2000 to approximately 9 million tons in 2001.
Although most nitrogen fertilizer imported into the United States has
for the past several years come from Canada, the amount of nitrogen
fertilizer imported from Canada decreased by almost 13 percent in 2001.
On the other hand, nitrogen fertilizer imports from Trinidad Tobago,
Venezuela, and Ukraine increased by 19 percent, 59 percent, and 469
percent, respectively, in 2001. The price of natural gas in these three
countries was considerably lower than the price of gas in the United
States; thus, fertilizer producers in these countries were able to
produce nitrogen fertilizer at much lower costs than domestic
producers.
Table 1 also shows that domestic agricultural consumption of nitrogen
decreased from 12.3 million tons in 2000 to 11.5 million tons in 2001-
-or about 7 percent. At least part of this reduction can be attributed
to the impact of higher fertilizer prices on the country's farmers. For
example, according to USDA's survey aimed at determining how corn
farmers responded to higher fertilizer prices in 2001, 11 percent of
responding farmers reported they adjusted their nitrogen fertilizer
rates or practices in response to higher nitrogen fertilizer prices
that year. About 80 percent of these farmers reduced their nitrogen
fertilizer use by an average of 23 percent.
Federal Government Has a Limited Role in Managing the Impact of Natural
Gas Prices on the Fertilizer Market:
The federal government has a limited role in managing the impact of
natural gas prices on the domestic fertilizer market. For example, the
government does not determine the price of natural gas; however, two
federal agencies--the Federal Energy Regulatory Commission (FERC) and
the Commodity Futures Trading Commission (CFTC)--play important roles
in promoting competitive natural gas markets by deterring
anticompetitive actions. In addition, the Energy Information
Administration (EIA) is responsible for obtaining information about and
analyzing trends in the natural gas market that are used by industry
and government decision makers. As with natural gas, the federal
government does not set or control prices for nitrogen fertilizer.
However, as part of its overall mission, USDA does monitor developments
in the agricultural sector that could affect farmers. Regarding the
fertilizer market, USDA collects, analyzes, and disseminates
information on fertilizer prices and uses and, in 2001, collected
additional information on the supply of nitrogen fertilizer and how
higher fertilizer prices affected farmers. Lastly, USDA provides
insurance and commodity price support programs to assist America's
farmers in managing risks associated with crop yields and revenues.
Federal Role in the Natural Gas Market Is Focused on Ensuring a
Competitive Marketplace:
As we reported in December 2002, in today's deregulated market the
federal government does not control the price of natural gas. However,
two federal agencies are responsible for ensuring that natural gas
prices are determined in a competitive marketplace. Specifically, FERC
plays a major role in overseeing the natural gas marketplace to ensure
that prices are just and reasonable and free from fraud and market
manipulation. Similarly, CFTC exercises regulatory oversight of natural
gas derivatives[Footnote 8] that are traded on federally regulated
exchanges, such as the New York Mercantile Exchange, to protect traders
and the public from fraud, manipulation, and abusive practices.
Following the price increases that occurred in the natural gas market
during 2000-2001, both FERC and CFTC initiated investigations into
possible fraud or manipulation. In August 2002, FERC reported that it
had found indications that several companies may have manipulated spot
prices upward for natural gas delivered to California during 2000-
2001.[Footnote 9] In March 2003, FERC reported that it had found
evidence of manipulation of both electricity and natural gas markets,
and that spot market gas prices were not produced by a well-functioning
competitive market.[Footnote 10] FERC staff made several
recommendations to FERC commissioners aimed at correcting the
deficiencies they found in the electric as well as the natural gas
market. In a statement before the National Energy Marketers Association
on April 4, 2003, the Chairman of CFTC acknowledged that the commission
had imposed monetary penalties and filed complaints in federal court
against several companies in connection with false reporting and
attempts to manipulate natural gas prices and operating an illegal
futures exchange. The Chairman also said that CFTC was actively engaged
in other energy sector investigations, and further charges might be
filed.
Following the price spike that occurred in the natural gas market in
February 2003, FERC and CFTC again undertook investigations of possible
market manipulation. On July 23, 2003, they issued a joint statement
saying that neither investigation had identified evidence of market
manipulation. FERC concluded that gas prices had risen in apparent
response to underlying supply and demand conditions and in a manner
consistent with those conditions.[Footnote 11] CFTC said that it found
nothing that suggested manipulative activity in the natural gas futures
and options market during the week of February 24, 2003.
A third federal agency--EIA--analyzes energy price movements and
provides market information that gas industry analysts use as an
indicator of both supply and demand. For example, in May 2002, EIA
began reporting estimates on the volume of gas in storage, which is a
key predictor of future natural gas prices. EIA also provides weekly
and monthly updates on the natural gas market and special reports on
various issues affecting the gas market. In its August 2003 energy
outlook, EIA reported that gas prices at the Henry Hub, one of the
largest gas market centers in the United States, fell below $4.70 per
mmBtu during the last week in July 2003. This was considered
significant because these prices had been considerably above $5 per
mmBtu on a monthly basis since the beginning of the year. However, EIA
advised that gas prices are at risk for volatility and industrial users
who rely on spot market purchases for their gas, such as nitrogen
fertilizer producers, face the greatest risk of higher natural gas
prices.
Federal Role in the Fertilizer Market Is Limited:
The federal government does not control prices for nitrogen fertilizer,
and nitrogen fertilizer products imported from other countries are
generally not subject to U.S. trade restrictions, such as quotas and
tariffs.[Footnote 12] However, as part of its overall mission, USDA
does monitor and report on developments in the agricultural sector that
could affect farmers and offers certain programs to help farmers manage
the risks associated with crop yield and revenues. The National
Agricultural Statistics Service (NASS) collects information on
agricultural acreage, production, stocks, prices, income, and
information on fertilizer prices and uses. For example, the annual
Agricultural Chemical Usage report provided by NASS includes
information for targeted crops by major producing states on how much
and what type of fertilizer was applied per acre. NASS also reports
monthly price indices for three major fertilizer types--nitrogen,
phosphate, and potassium--and actual prices paid by farmers for several
fertilizer products in April of each year.
In addition to its routine surveys, USDA collected additional
information in 2001 about nitrogen fertilizer availability and prices.
According to officials from the Office of the Chief Economist, this
information was collected because Congress and others had raised
concerns about higher natural gas prices and the possible impact these
prices would have on the availability and price of fertilizer. In order
to collect this information, questions were added to USDA's ongoing
Crop Progress survey aimed at determining the availability of nitrogen
fertilizer in 2001 and to the Agricultural Resource Management Survey
to determine how corn growers responded to the higher nitrogen
fertilizer prices that occurred in 2001. The results of this additional
survey information are discussed elsewhere in the report.
USDA also offers insurance and commodity price support programs to help
farmers manage risk associated with crop yields and revenues, but it
currently does not offer similar programs to cover the risks associated
with farm production costs, such as the cost of fertilizer. For
example, in 2002, USDA's insurance program covered crops valued at $41
billion, and commodity price support payments have averaged more than
$10 billion per year since 1996. According to USDA officials, the
agency does not offer insurance to cover the risks associated with farm
production costs because these risks tend to be small compared with the
risks associated with crop prices. Since a farmer's income per acre
from a crop equals the crop price times the yield, changes in either
crop price or yield are directly and fully reflected in a farmer's
income. As shown in table 2, crop prices can change significantly over
time and from year to year. From 1996 to 2001 the average price of corn
declined by $.98 per bushel, or 35 percent, and average corn prices
declined by $.61 per bushel--24 percent--from 1997 to 1998. Overall,
from 1996 to 2001, average corn yields increased only 11 percent--from
130 bushels per acre to 144 bushels per acre. In addition, while
national average yields are relatively stable from year to year, the
actual yields for individual farmers can vary significantly from year
to year as a result of natural causes, such as weather conditions and
the extent of loss caused by insects and diseases.
Table 2: Average Corn Prices, 1996-2001:
Crop prices/yields: Price (dollars per bushel at harvest; 1996: 2.82;
1997: 2.52; 1998: 1.91; 1999: 1.69; 2000: 1.77; 2001: 1.84.
Crop prices/yields: Yield (bushels per planted acre); 1996: 130; 1997:
130; 1998: 136; 1999: 135; 2000: 138; 2001: 144.
Source: USDA, Economic Research Service.
[End of table]
In contrast, a farmer faces fewer risks with costs of production
because these costs tend to remain stable from year to year. As shown
in table 3, total production costs per acre for a corn farm remained
relatively stable from 1996 through 2001, and changes in different cost
categories often offset one another. For example, although average
fertilizer costs increased by $8.68 per acre from 2000 to 2001, this
large increase was offset by a decrease of $8.24 in fuel, lube, and
electricity costs. Other production costs also decreased and, as a
result, total production costs decreased by $3.84, or about 2 percent.
Table 3: Average Costs of Materials Used per Acre on Corn Farms, 1996-
2001:
Cost categories: Fertilizer; 1996: $47.04; 1997: $46.21; 1998: $41.44;
1999: $38.75; 2000: $39.04; 2001: $47.72.
Cost categories: Seed; 1996: 26.65; 1997: 28.71; 1998: 30.02; 1999:
30.29; 2000: 30.02; 2001: 32.34.
Cost categories: Chemicals; 1996: 27.42; 1997: 26.87; 1998: 27.36;
1999: 28.40; 2000: 28.82; 2001: 26.44.
Cost categories: Fuel, lube, and electricity; 1996: 24.43; 1997: 24.55;
1998: 22.96; 1999: 23.04; 2000: 29.12; 2001: 20.88.
Cost categories: Repairs; 1996: 15.78; 1997: 16.17; 1998: 16.65; 1999:
17.17; 2000: 17.55; 2001: 13.76.
Cost categories: Custom operations; 1996: 11.30; 1997: 11.30; 1998:
11.29; 1999: 11.37; 2000: 11.48; 2001: 10.94.
Cost categories: Manure; 1996: 0.60; 1997: 0.56; 1998: 0.51; 1999:
0.49; 2000: 0.48; 2001: 2.65.
Cost categories: Interest on operating capital; 1996: 3.86; 1997: 3.96;
1998: 3.61; 1999: 3.50; 2000: 4.53; 2001: 2.60.
Cost categories: Other variable cash expenses; 1996: 0.30; 1997: 0.32;
1998: 0.31; 1999: 0.31; 2000: 0.31; 2001: 0.22.
Cost categories: Soil conditioners (lime); 1996: 0.16; 1997: 0.16;
1998: 0.16; 1999: 0.17; 2000: 0.16; 2001: 0.12.
Cost categories: Total costs; 1996: $157.54; 1997: $158.81; 1998:
$154.31; 1999: $153.49; 2000: $161.51; 2001: $157.67.
Source: USDA, Economic Research Service.
[End of table]
Similarly, although USDA provides information to farmers through the
Cooperative State Research, Education and Extension Service to help
them participate in farm commodity futures markets, there is relatively
little information regarding farm production costs, such as fertilizer.
According to a state extension service official, the extension service
has issued several publications that provide information on farm
commodity futures markets because farmers are generally familiar with
these markets and have access to the information needed to participate
successfully in these markets. However, the extension service generally
does not encourage farmers to participate in futures markets involving
farm production cost items, such as fuels, because farmers are not as
familiar with these markets. Instead, farmers generally use various
prepayment methods to control the costs of items used in producing
crops.
Observations:
Natural gas is the most costly ingredient used in manufacturing
nitrogen fertilizer products. However, the price of natural gas can
vary significantly in different markets throughout the world.
Unfortunately for domestic nitrogen fertilizer manufacturers, the price
of natural gas in the United States can far exceed its price in other
parts of the world. As a result, domestic manufacturers are at a
competitive disadvantage when domestic natural gas prices rise.
Manufacturers can close plants in response to periodic price spikes and
resume production when prices drop again, but higher prices sustained
over the long term may result in more permanent curtailment of domestic
production. In the past, farmers' needs for fertilizer have been met by
increases in imports when domestic production has been curtailed, as it
was in 2001. However, it remains to be seen how well the market will
respond to further reductions in the domestic production of nitrogen
fertilizer that may be caused by more sustained higher natural gas
prices in the future. Earlier this year, increased natural gas prices
once again caused higher production costs for the nation's fertilizer
manufacturing industry, which in turn contributed to a reduction in the
amount of nitrogen being produced and an increase in nitrogen
fertilizer prices. Although it is too early to determine whether these
higher gas prices will have the same adverse effect on the fertilizer
manufacturing industry as higher gas prices did in 2001, some within
the industry contend that continuing higher gas prices are threatening
the industry.
Agency Comments:
We provided USDA and TFI with a draft of this report for review and
comment. We received oral comments from USDA and TFI officials, who
agreed with our facts and observations.
:
As agreed with your office, unless you publicly announce the contents
of this report earlier, we plan no further distribution until 30 days
from the report date. At that time, we will send copies to the USDA
Secretary, The Fertilizer Institute, and other interested parties. We
also will make copies available to others upon request. In addition,
the report will be available at no charge on the GAO Web site at
[Hyperlink, http://www.gao.gov] http://www.gao.gov.
Questions about this report should be directed to me at (202) 512-3841.
Key contributors to this report are listed in appendix II.
Sincerely yours,
Jim Wells
Director, Natural Resources and Environment:
Signed by Jim Wells:
[End of section]
Appendixes:
[End of section]
Appendix I: Objectives, Scope, and Methodology:
In our study of the natural gas and nitrogen fertilizer markets, we
determined (1) how the price of natural gas affects the price,
production, and availability of nitrogen fertilizer and (2) the federal
government's role in managing the impact of natural gas prices on the
U.S. fertilizer market.
To address these objectives, we reviewed pertinent documents and
obtained information and views from a wide range of officials from both
the federal government and the private sector. We interviewed staff
and/or obtained information from the Department of Agriculture's (USDA)
Office of the Chief Economist, Economic Research Service, National
Agricultural Statistics Service, and Cooperative State Research,
Education and Extension Service; the Department of Commerce; the
Department of Energy's Energy Information Administration; the Federal
Energy Regulatory Commission; the Commodity Futures Trading Commission;
and the International Trade Commission. We also discussed the
relationship between the natural gas and nitrogen fertilizer markets
with representatives from various industry organizations, including The
Fertilizer Institute (TFI); the International Fertilizer Development
Center; the American Farm Bureau Federation; Agrium Incorporated; CF
Industries, Incorporated; and Terra Industries, Incorporated.
To determine how the price of natural gas affects the price of nitrogen
fertilizer, we examined industry-supplied natural gas prices and
industry, as well as government, price data for nitrogen fertilizer and
determined how fertilizer prices behaved when gas prices increased in
2000-2001 and again in 2003. We determined the extent to which a
correlation existed between the price of natural gas and prices for
three nitrogen fertilizers, anhydrous ammonia, urea, and urea ammonium
nitrate, which were included in our analysis because they are widely
used by American farmers. We compared natural gas and nitrogen
fertilizer prices for the period January 1998 through March 2003. More
specifically, we obtained industry prices for natural gas at the Henry
Hub from Global Insight (USA), Inc. We selected Henry Hub prices
because this market center is one of the largest in the country and
often serves as a benchmark for wholesale natural gas prices across the
country. We obtained monthly spot prices, or the current cash prices at
which nitrogen-based fertilizers are sold at various locations, from an
industry source--Green Markets: Fertilizer Market Intelligence Weekly.
Green Markets, a Pike & Fischer, Inc., publication, collects
independent spot price quotes for 19 fertilizer commodities every week.
Our analysis of the market data included fertilizer prices at two major
market locations: (1) the U.S. Gulf Port, whose prices are considered
the benchmark for fertilizer prices in North America, and (2) the Mid
Cornbelt, where large quantities of nitrogen fertilizer are used. In
addition, we compared the relationship between the prices paid by
farmers for nitrogen fertilizer and natural gas prices. To do this, we
calculated the monthly prices paid by farmers for nitrogen fertilizer.
We used the April prices paid by farmers for anhydrous ammonia, urea
ammonium nitrate (32 percent nitrogen solution) and urea (46 percent
nitrogen). Since these prices are reported only once a year in April,
we applied the monthly prices paid index for nitrogen fertilizer
published by USDA to the April prices in order to calculate a monthly
price for nitrogen fertilizer. We did this by using the appropriate
weights, supplied by USDA, for each of the fertilizer components
(anhydrous ammonia, urea ammonium nitrate, and urea). The index for
nitrogen fertilizer is based on the Producer Price Index series (PPI)
and appropriate subcomponents from the Bureau of Labor Statistics. The
April fertilizer prices are obtained by survey from establishments
selling fertilizers to farmers.
To determine the effect of natural gas prices on domestic nitrogen
fertilizer production, we examined nitrogen inventory, production, and
consumption data obtained from government and industry sources from
1996 through 2002. These data (shown in table 1) reflect the estimated
quantity of nitrogen in the United States, including the nitrogen
nutrient in several fertilizer products--anhydrous ammonia, ammonium
nitrate, ammonium sulfate, aqua, nitrogen solutions, urea, and other
nitrogen materials. The estimated nitrogen production, imports, and
exports were derived from the Department of Commerce, Bureau of Census,
quarterly report Inorganic Fertilizer Materials and Related Products
(MQ325B). The inventory data were taken from a TFI report, Fertilizer
Record, which reflects the results of a TFI monthly survey of domestic
nitrogen fertilizer producers. The agricultural consumption data were
derived from reports filed by fertilizer users with state fertilizer
control officials. These reports are tabulated by the Association of
American Plant Food Control Officials, Inc. (AAPFCO) and TFI and
published by TFI in Commercial Fertilizers. Because of the
incompleteness of the state fertilizer consumption reports, an unknown
but significant amount of missing data, particularly for the most
recent year, are imputed based on historical information by AAPFCO and
TFI. The estimates described above were used in this report for several
reasons. First, the estimates of total supply and total demand, which
reflect the combination of data from several independent sources,
differ only slightly. Second, the trends in consumption from the trade
source are consistent with those in the related Census Bureau series.
Third, these data are widely used by companies that produce nitrogen
fertilizer. In addition, we reviewed financial reports and other
industry documents that describe how the nitrogen manufacturing
industry responded to higher natural gas prices and interviewed
industry and government officials to obtain their views and comments.
In determining the effect of higher natural gas prices on the supply of
nitrogen fertilizer, we relied primarily on the results of a USDA
survey on fertilizer availability in 2001. According to USDA officials,
they added questions concerning nitrogen fertilizer supplies to the
ongoing Crop Progress survey[Footnote 13] because this was the most
efficient and reliable survey vehicle available on short notice. USDA
asked respondents to report on the adequacy of nitrogen fertilizer
supplies that were available to producers in their area. Although the
responses were subjective, those people providing the responses are
widely respected as the most knowledgeable about agricultural
situations in their respective counties. The results of the survey
questions used to gather information on the availability of nitrogen
fertilizer were presented in the National Agricultural Statistical
Service's Crop Progress report dated June 4, 2001. We also examined
data contained in our supply and demand table (table 1) to determine
sources, supplies, and consumption of nitrogen fertilizer over the 7-
year period ending in June 2002.
To determine what role the federal government plays in managing the
impact of natural gas prices on the U.S. fertilizer market, we reviewed
the responsibilities of federal agencies regarding the natural gas and
fertilizer markets and their efforts to monitor and collect information
on these markets. We reviewed relevant documents provided by
agriculture and fertilizer industry representatives and interviewed
these officials to obtain their views on what actions, if any, the
federal government should take to mitigate the effects of high natural
gas prices on the U.S. fertilizer market. We also reviewed relevant
documents and interviewed USDA and state extension service officials
regarding how farmers manage the risks associated with their production
costs and the federal government's role in assisting farmers in
managing these risks. Finally, we reviewed the results of a USDA
analysis of the 2001 Agricultural Resource Management Survey, which was
used to gather information on how American farmers who grow corn
responded to the higher nitrogen fertilizer prices in 2001.[Footnote
14] The results of this analysis were presented in the USDA, Economic
Research Service's Agricultural Income and Finance Outlook report dated
September 26, 2002.
We performed our review from February through August 2003 in accordance
with generally accepted government auditing standards. While we did not
independently verify the accuracy of natural gas and fertilizer prices
and other data obtained from industry sources, we did compare these
data with other relevant data to ascertain the reasonableness of the
data we used. We also interviewed knowledgeable government and industry
officials to determine the reasonableness of the data and our use of
them. We determined that the data were sufficiently reliable for the
purposes of our report.
[End of section]
Appendix II: GAO Contacts and Staff Acknowledgments:
GAO Contacts:
Jim Wells (202) 512-3841 Mark Gaffigan (202) 512-3168:
Staff Acknowledgments:
In addition to the individuals named above, Carol Bray, James Cooksey,
Nancy Crothers, Paul Pansini, Robert Parker, and Barbara Timmerman made
key contributions to this report.
(360306):
:
:
FOOTNOTES
[1] Spot prices are the current cash prices at which fertilizer is sold
at various locations. For the purposes of our review, we used prices at
two major market locations: the U.S. Gulf Port, whose price is
considered the benchmark for fertilizer prices in North America, and
the Mid Cornbelt. Unless otherwise specified, fertilizer prices
referred to in this report are Gulf Port prices.
[2] The Henry Hub is one of the largest gas market centers in the
United States. Its price often serves as a benchmark for wholesale
natural gas prices across the country. The price of natural gas is
commonly measured in dollars per million British thermal units (mmBtu),
which is approximately 1,000 cubic feet of gas.
[3] Information on nitrogen and fertilizer production and consumption
is reported in industry sources on a fertilizer year basis--which
represents the time from July 1 to June 30. Thus, fertilizer year 2002
represents the time between July 1, 2001 and June 30, 2002. Unless
noted, all references to nitrogen and fertilizer production and
consumption are on a fertilizer year basis.
[4] U.S. General Accounting Office, Natural Gas: Analysis of Changes in
Market Prices, GAO-03-46 (Washington, D.C.: Dec. 18, 2002).
[5] TFI represents, by voluntary membership, manufacturers, retailers,
trading firms, and equipment manufacturers of the U.S. fertilizer
industry. The Institute employs a full-time Washington, D.C. staff in
various legislative, education, and technical areas.
[6] Although there is a strong correlation between natural gas prices
and nitrogen fertilizer prices, many other variables influence the
supply and demand market forces that ultimately determine fertilizer
prices. In addition, U.S. companies that produce nitrogen use various
purchasing techniques to manage their natural gas price risks;
therefore, they do not purchase all their gas at the prevailing market
price.
[7] The International Fertilizer Development Center is a public,
nonprofit organization dedicated to increasing agricultural
productivity through the development and use of sound plant nutrient
technology.
[8] These natural gas derivatives are futures and options contracts
whose value is derived from the price of natural gas itself. These
contracts can be bought and sold by entities that are interested in
protecting themselves against increases in the price of natural gas.
[9] FERC, Initial Report on Company-Specific Separate Proceedings and
Generic Reevaluations: Published Natural Gas Price Data; and Enron
Trading Strategies, August 2002.
[10] FERC, Final Report on Price Manipulation in Western Markets, March
2003.
[11] FERC, Report on the Natural Gas Price Spike of February 2003, July
2003.
[12] Although nitrogen fertilizer is generally imported into the United
States under a free trade arrangement, the United States International
Trade Commission has, since 1999, ruled on four cases alleging that
certain nitrogen fertilizers exported from several countries were being
sold in the United States at less than fair value. In three of these
cases --(1) Solid Urea from Armenia, Belarus, Estonia, Lithuania,
Romania, Russia, Tajikistan, Turkmenistan, Ukraine, and Uzbekistan,
USITC Pub. 3248, Inv. Nos. 731-TA-339 and 340-A-1 (October 1999); (2)
Certain Ammonium Nitrate from Russia, USITC Pub. 3338, Inv. No. 731-TA-
856, (August 2000); and (3) Certain Ammonium Nitrate from Ukraine,
USITC Pub. 3448, Inv. No. 731-TA-894, (August 2001) --the Commission
found that certain fertilizers imported from the cited countries were
being sold at prices that materially injured the industry in the United
States. Therefore, the price of certain nitrogen fertilizers imported
from Armenia, Belarus, Estonia, Lithuania, Romania, Russia, Tajikistan,
Turkmenistan, Ukraine, and Uzbekistan was restricted, either by order
or agreement. These restrictions are still in effect.
[13] USDA, National Agricultural Statistics Service conducts crop
progress surveys on a weekly basis from early April to the end of
November to collect specific data and the overall condition of selected
crops in major producing states. The surveys are nonprobability surveys
that include a sample of more than 5,000 people who make visual
observations and have contact with farmers in their counties.
[14] The Agricultural Resource Management Survey, conducted by USDA's
Economic Research Service, is an annual, state-by-state survey of farms
and agricultural commodities conducted to obtain information about the
financial condition, production practices, resource use, and economic
well being of America's farm households. Trained enumerators conduct
personal interviews of a statistical sample of farm operators to
collect data for this survey.
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