AAI Comments on Recent Shake-up in Global Potash Markets, Announces Upcoming Monograph on the Fertilizer Oligopoly

Today the American Antitrust Institute (AAI) weighed in on the recent shake-up in global potash markets. Russian potash producer Uralkali’s decision to break from the pack and lower prices has thrown the tight oligopoly of global fertilizer producers into disarray.

This episode in global fertilizer markets follows a period of extraordinarily high prices and profits beginning in 2008 and a long history of cartel-like pricing stretching back decades. Fertilizer, a critical input in the agricultural sector and farming worldwide, is dependent on phosphorus, potash, and nitrogen.

AAI’s Vice President, economist Diana Moss, noted that breakdowns in pricing “agreements” among producers occur frequently. “The question is whether this is a change to more competitive pricing, or just a blip as the dominant producers reorganize to regain control over prices and output,” said Moss.

Moss noted that India and China have become powerful buyers of fertilizer in recent years, exercising countervailing market power against sellers and forcing prices downward. It is also possible that the fall in potash prices may be a strategic way for dominant producers to blockade entry by newcomers to potash mining and marketing.

Recent developments tee-up the forthcoming release of a new AAI monograph on global fertilizer markets, The Fertilizer Oligopoly: The Case for Global Antitrust Enforcement. Co-authored by agricultural economist C. Robert Taylor of Auburn University and AAI’s Moss, the paper takes a close look at how the few, dominant fertilizer producers have exercised market power for years -- to the detriment of competition and consumers.

Taylor noted that the analysis makes a strong case for the elimination of antitrust immunity enjoyed by fertilizer producers in the U.S. “The upheaval caused by Uralkali’s defection from any tacit or explicit agreement among producers is a compelling indication that potash prices aren’t the product of a competitive market,” said Taylor.

The AAI monograph will document the need for an antitrust investigation into industry pricing. “The potash shakeup is not the time to celebrate,” Moss noted, “it is the time to investigate.”

“Competitive problems in fertilizer markets transcend traditional competition policy concerns,” said Taylor. “They also raise food sustainability issues for the U.S. and other countries.”

The AAI expects to release the monograph on its website, www.antitrustinstitute.org, later this month.

Media Contacts:
Diana Moss: 720-233-5971, dmoss@antitrustinstitute.org
Robert Taylor: 334-844-1957, c.robert.taylor@auburn.edu