URBANA, Ill. (RFD News) — Fertilizer prices have experienced significant volatility this year amid concerns surrounding the conflict involving Iran and the Strait of Hormuz.
However, University of Illinois Agricultural Economist Henrique Monaco said consolidation within the fertilizer industry has been a long-term trend that predates current geopolitical tensions.
“When you look at the fertilizer industry more broadly or other ag inputs, the consolidation’s been there. It is nothing that started right now with the Strait of Hormuz, right? But once you have a shock like that on prices, you start looking again. To your point, it is not specifically this shock that happened to fertilizer prices; this is not something that is a consolidation issue. The consolidation’s been going specifically here in the U.S. in the nitrogen industry since the mid-2000s. Again, it is nothing that started right now with the conflict or because of that.”
Monaco’s team has analyzed industry trends over the past 25 years and found that a small number of companies control a significant share of U.S. ammonia production capacity.
“Since 2000, there was a decrease in the total number of firms, but also in operating plants. When it comes to who has the top ammonia production capacity in the U.S., CF Industries and Nutrien would be the top two. Those together here will account for roughly 55 percent to 60 percent. The top four companies account for 70% of ammonia production capacity. That is not necessarily market share, but it is one indicative here.”
Monaco noted that consolidation is not unique to fertilizer manufacturing, pointing to the seed, machinery and crop protection industries as other sectors where a small number of companies hold significant market share.
