THE TRUTH ABOUT COST
Large Moroccan and Russian phosphate producers compete unfairly in the U.S. market. How? They receive massive government subsidies that harm U.S. manufacturing and workers. In other words, foreign governments are stacking the deck so others can’t compete. Here’s what you need to know.
The Moroccan and Russian governments provide state funding, exclusive and heavily discounted mining rights, and other subsidies to give their phosphate producers an unfair advantage. In fact, the U.S. Department of Commerce issued preliminary findings that phosphate producers from these countries received massive subsidies—at a rate of 16.88 percent for Moroccan producer OCP1 and 72.5 percent subsidy benefit for one producer in Russia2.
What does that mean? It means Moroccan and Russian producers—with the financial backing of their governments—don’t incur the same amount of costs that other producers do. These artificial advantages allow them to undercut American and other producers that compete fairly.
FOREIGN GOVERNMENT INTERVENTION HARMS AMERICAN MANUFACTURING & WORKERS
Foreign government subsidies have enabled Moroccan and Russian producers to gain greater control of the world’s phosphate markets3. The result? Their subsidized phosphates drive down prices to a point at which American phosphate producers can no longer afford to operate, factories close, and workers lose their jobs.
The impact is evident: between 2017 and 2019, there was a 50 percent increase in phosphate imports in the United States. By the fourth quarter of 2019, they had forced prices to a 13-year low4.
LAX ENVIRONMENTAL REGULATION AND ENFORCEMENT
American phosphate producers are required to comply with strict environmental regulations to protect our land and water resources. They spend many millions of dollars every year to ensure regulatory compliance and invest in practices and technologies to offset their environmental impact. It is part of the cost of operating a responsible business.
The same cannot be said for Morocco's state-owned producer that is not required to meet comparable environmental standards and is not held accountable when they violate environmental protections. In fact, the Moroccan producer has been allowed to dump waste directly into the ocean through offshore pipelines with no legal or financial repercussions5. Skirting environmental regulations saves them big money, but it comes at a dangerously high cost to the planet.
1 Federal Register.
2 U.S. Department of Commerce.
3 Mosaic Petition Volume II. Page II-5.
4 Mosaic Petition Volume I. Page I-34.
5 The Guardian.