Gentlemen, I would hope that this Committee might lend its interest and prestige in support of this approach as part of the solution to our current fertilizer problems. It makes great economic sense, sound agriculture sense and there is solid environmental support for this approach as well. But most of all, and for this reason I am convinced it will have your support and encouragement, it just makes good common sense. Thank you. NATIONAL FARMERS UNION, Hon. ELIGIO DE LA GARZA, Chairman, Subcommittee on Department Operations, Washington, D.C. DEAR CONGRESSMAN DE LA GARZA: I want to commend you for scheduling hearings on the problem of fertilizer shortages. The Department of Agriculture is projecting shortages of one million tons of nitrogen and 700,000 tons of phosphate this year. The shortage could turn out to be even larger, unless the proper steps are taken now. The expected shortfall will be felt most heavily in the states of the Midwest and Northwest, including Minnesota. This is true for several reasons: We are distant from points of origin and are, therefore, not in the low-cost distribution area. We will have exceptional demand for fertilizer because of the acreage coming back into crop use. We are getting only a small fraction (about 6%) of the ammonium nitrates which we had been buying in recent years from Canadian sources. Fertilizer companies can sell to export markets in some instances at prices as much as 50% higher than domestic ceiling prices. CF Industries, a Midwest fertilizer cooperative, was prevented from acquiring an Iowa plant by the Justice Department on anti-trust grounds. The plant was later sold to a Mississippi corporation which apparently will use the facilities to sell in the export market. CF Industries, as a cooperative, is dedicated to service to domestic U.S. agriculture, and would have devoted the facilities of the Iowa plant to production exclusively for domestic use. Even if fertilizer supplies were available, there would be some problem in the Midwest and Northwest due to the transportation crisis. Many anhydrous ammonia plants are operating with natural gas on interruptible service arrangements. These plants could be hurt severely by the fuel shortage in winter. Plants have suffered some gas curtailment in the last three winters, thus a tight situation could sharply reduce fertilizer production. In trying to remedy the fertilizer shortage, we must be careful not to take action that will have harmful side-effects. Export controls could conceivably help conserve supplies for American farmers, but they have to be carefully handled so that they do not invite retaliation and shut off supplies of fertilizer which we import. Some limited adjustment in the ceiling prices might help trim the differential between domestic and export prices. However, if U.S. plants are operating at full capacity, simple removal of price ceilings will not result in an expansion of production. It would only result in higher production costs to farmers, and possibly higher food costs to consumers. It appears to me that the most effective immediate action would be to assure total needs of the fertilizer industry for natural gas. Natural gas shortages held nitrogen production to a 2 percent increase during the fiscal year ending June 30, 1973, while usage of nitrogen fertilizer by farmers increased 5 percent during the same year. Natural gas is also essential for drying of phosphoric materials in the manufacture of phosphates. Although we recognize the real demands for natural gas for home heating requirements this winter, no fertilizer plant should be forced to operate below capacity because of inadequate fuels during this fall and winter. We are convinced that usage of natural gas as feedstocks for the manufacture of less essential items might be further restricted, so that adequate natural gas will be available for both fertilizer production and home heating. Accordingly, Farmers Union has recommended that natural gas be added to the legislation (H.R. 96S1) to require a mandatory fuels allocation program, which is currently under mark-up in the House Commerce Committee. As a more long-range solution to the fertilizer problem, we recommend that the role of cooperatives—including Farmers Union Central Exchange, CF Industries, mentioned earlier, and others-be strengthened in their fertilizer production operations. Since our cooperatives are committed to service to U.S. farmers, they are the most dependable suppliers at reasonable prices to American farmers-particularly at a time when export demand is high. I respectfully request that, if appropriate, this statement be included in the record of the hearings on the fertilizer situation commenced September 26. Sincerely, CY CARPENTER, President, Minnesota Farmers Union. LEETON ELEVATOR, Leeton, Mo., September 28, 1973. Re Fertilizer supply shortage. DEAR CONGRESSMAN RANDALL: Thanks again for your interest in the problem we are having in securing an adequate supply of fertilizer to meet the needs of our area farmers for the Fall and Winter season. However, since talking with you on the phone in August, I believe the supply problem has become even more acute. Yesterday I called several suppliers who normally supply us with most of our materials and could not get a commitment on any material until after the first of next year at the earliest. With normal weather to allow us to get on the fields this Fall, we do not have enough fertilizer to last over 60 days. Our heaviest movement of material usually begins in December and lasts through May or June depending on the season. It appears that a good many acres of grass and row crops will not get as much plant food as usual. I'm sure you are already doing everything possible to give us some relief for our problem, but I wanted to let you know that for us, and many other fertilizer dealers in Western Missouri, the shortage is rapidly becoming more critical. Thanks for your very able representation. I appreciate it. Very truly yours, ROBERT L. HOUK. |