Inflation Isn’t ‘Transitory’ on My Farm

By Blake Hurst

The Wall Street-Journal

In 45 years of raising corn, soybeans and flowers I’ve never seen anything like this. Inflation may be transitory, but so is lung cancer.

“Why haven’t you signed the release?” asked one of my suppliers in a rather plaintive email. I was confused. I’d never been asked to sign a release approving shipping charges before. I read further and found that I had to agree to pay nearly $20,000 in extra shipping charges to receive the container of plastic pots we will fill with flowers this spring. I also learned that my pots were stuck in a queue of container ships near California’s Port of Long Beach. To get them to Missouri, I had to pay ransom.

The next day I talked with both of my fertilizer suppliers. Still reeling from the flowerpot disaster, I was shocked that the only question about the price of the three major fertilizer inputs was whether it would double or triple. My family and I have finished applying the first of three fertilizers, and the increased costs for our farm are about $50,000, with an anticipated $40,000 increase for the remaining two inputs. All told, costs for our small business will soar by $100,000 this year. Inflation is more than a transitory problem around here.

The reasons for this price shock are as numerous as Twitter experts, but all our inputs have one thing in common: They are imported. Legislation introduced by Sen. Josh Hawley (R., Mo.) would require 50% of the value of a product to be produced in the U.S. to be sold commercially in America. Sen. Marco Rubio (R., Fla.) and others have also jumped on the industrial-policy bandwagon.

Requiring U.S. production seems like a smart policy. Wouldn’t a secure domestic supply protect my business from shocks like these? Maybe not. There is more to the story.

Anhydrous ammonia, the main source of nitrogen for our farm, is a natural-gas product, and much anhydrous production in the U.S. occurs near the Gulf of Mexico. Hurricane Ida caused many of those plants to halt production, at least for a time. Foreign plants helped make up the shortfall. As bad as the situation has been, imports have kept it from getting worse.

Phosphorus and potash are the other two major fertilizers we use, and the price increases we are seeing for both are a direct result of trying to replace imports with domestic production. Mosaic, the leading domestic fertilizer producer, asked the Commerce Department to investigate imports of phosphate fertilizer from Morocco and Russia, and the U.S. International Trade Commission has levied duties to protect domestic fertilizer producers from “dumping.” Apparently foreign companies are taking advantage of farmers by selling them cheap fertilizer. Tariffs on phosphorus have given Mosaic an 80% market share for phosphorus fertilizer in the U.S., according to a brief filed by five agricultural groups against tariffs on phosphate fertilizers from Morocco. It is no coincidence that prices for phosphorus have doubled since the fall of 2020. Mosaic’s earnings saw a year-over-year increase of around 6,000% in the last quarter. Maybe imports actually protect consumers from domestic monopolies?

This year the Biden administration placed tariffs of 220% on Chinese-produced truck trailers used to transport shipping containers. Part of the increased cost of my plastic pots is because of a shortage of these trailers.

I expect that in time we’ll see studies that try to estimate the cost to taxpayers for each chassis-production job saved by the Biden tariffs. But that will be too late to help me and the thousands of consumers who will pay more for the things I produce. Apart from the shipment floating in the Pacific Ocean, the rest of our pots come from domestic producers. We ordered next year’s supply six months before we will need them, but our supplier—citing labor shortages—warned that we likely won’t receive them in time for planting. How can we replace imports with domestic production when U.S. suppliers can’t meet current demand?

The economy is too complex for centrally directed solutions. For nearly a decade, we have heard about the costs of globalization. I’m no globalist but I know my business depends on a flexible economy that has access to foreign markets and offers consumers good choices.

Mr. Hurst is a corn, soybean and greenhouse farmer.