The United States is considering raising tariffs again on phosphate fertilizers from Morocco just months after announcing a significant reduction in tariffs to lower the prices of agricultural inputs. This decision, which directly affects American farmers as well as the Moroccan giant of the phosphate industry, the OCP group, was made public this Wednesday by the American Department of Commerce.
After a notable reduction in import duties on OCP products, from 19.97% to 2.12% in November 2023, they underwent an abrupt increase, now standing at 14.21%. According to the ministry’s statements, this provisional measure is based on an in-depth analysis of possible subsidies granted to the Moroccan phosphate industry.
The impact of this increase negatively impacts the U.S. agricultural community, which relies heavily on phosphate fertilizer imports. The economic consequences will not take long to be felt, with a predictable increase in the price of phosphate, thus jeopardizing the profit margins of corn farmers.
The National Corn Growers Association (NCGA), representing the interests of corn producers, expressed its dissatisfaction with this government decision, deeming it counterproductive for farmers. For its part, the OCP group, the world leader in the production of phosphates, expressed its disappointment with the preliminary results and contested the methodology used by the American ministry to calculate import duties. An appeal is being considered before the United States Court of International Trade.
Import duties on Moroccan fertilizers have long been a point of friction between the United States and Morocco. In 2021, Mosaic, an American fertilizer producer, filed a complaint against Moroccan competition, leading to a series of challenges from OCP which ultimately won a legal victory in November 2023. The ministry’s recent decision appears to be a new offensive aimed at weakening Morocco’s competitive position on the international market.
U.S. farm groups, facing supply chain disruptions in 2021 that led to reduced supply and soaring prices, have advocated for increased fertilizer imports. Although prices have fallen from their historic peaks, farmers argue that increased tariffs would only worsen their financial burdens in an already difficult market environment.
Harold Wolle, president of the NCGA, noted in a statement that the falling price of corn, combined with already high input costs, makes the Commerce Department’s decision particularly harmful for farmers.
The customs duties imposed on Morocco mainly target OCP, which suspended its shipments to the United States following the tariff increase in 2021. OCP is contesting the decision of the US Department of Commerce, arguing that it is based on an erroneous valuation of the company’s mining rights to phosphate ore.
The new rate, although lower than the initial rate of 19.97% established in 2021, marks a significant move towards it.
OCP expressed its desire to resume its role as a reliable, quality supplier of sustainable phosphate fertilizers as soon as conditions permit, emphasizing the importance of this industry to U.S. agriculture and global food security.
The tariff increase comes as U.S. fertilizer companies report falling profits, in part because of lower prices. Mosaic notably reported a 26% drop in its turnover in the first quarter compared to the previous year, reflecting the drop in sales prices.
Bruce Bodine, CEO of Mosaic, acknowledged that fluctuations in tariffs created some volatility in the market, but said the tariffs “worked as intended”, neutralizing the effect of government subsidies given to foreign exporters.
