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Report to the Ranking Democratic Member, Committee on Agriculture, 
Nutrition and Forestry, U.S. Senate:

September 2003:

NATURAL GAS:

Domestic Nitrogen Fertilizer Production Depends on Natural Gas 
Availability and Prices:

[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-03-1148] GAO-03-
1148:

GAO Highlights:

Highlights of GAO-03-1148, a report to the Ranking Democratic Member, 
Committee on Agriculture, Nutrition and Forestry, U.S. Senate 

Why GAO Did This Study:

Natural gas is the most costly component used in manufacturing 
nitrogen fertilizer. Therefore, when natural gas prices increased in 
2000–2001, U.S. companies that produce nitrogen fertilizer reported 
adverse financial consequences resulting from much higher production 
costs. Concerns also arose that the nation’s farmers would face much 
higher nitrogen fertilizer prices and that there might not be an 
adequate supply of nitrogen fertilizer to satisfy farmers’ demands at 
any price. Responding to congressional concerns, GAO undertook a study 
to determine (1) how the price of natural gas affects the price, 
production, and availability of nitrogen fertilizer and (2) what role 
the federal government plays in mitigating the impact of natural gas 
prices on the U.S. fertilizer market.

What GAO Found:

Higher natural gas prices have contributed to higher nitrogen 
fertilizer prices and reduced domestic production. The following 
figure shows the relationship between natural gas prices and the 
farmer price for nitrogen fertilizer.

Farmer Price for Nitrogen Fertilizer Relative to Natural Gas Prices, 
January 1998–March 2003

[See PDF for image]

[End of figure]

Higher gas prices in 2000–2001 also led to a 25 percent reduction in 
domestic production of nitrogen but, despite this decline, the supply 
of nitrogen fertilizer was adequate to meet farmers’ demand in 2001. 
Demand was met because U.S. nitrogen production was supplemented by a 
43 percent increase in nitrogen imports and a 7 percent decrease in 
agricultural consumption of nitrogen fertilizer.

The federal government does not set natural gas prices, and it has a 
limited role in managing the impact of natural gas prices on the U.S. 
fertilizer market. Three federal agencies—(1) the Federal Energy 
Regulatory Commission, (2) the Commodities Futures Trading Commission, 
and (3) the Energy Information Administration—are responsible for 
ensuring that natural gas prices are determined in a competitive and 
informed marketplace. Moreover, the federal government has no role in 
controlling fertilizer prices, but the U.S. Department of Agriculture 
(USDA) does monitor developments in the agricultural sector, including 
fertilizer markets, that could affect farmers. Also, in 2001, USDA 
collected additional survey information in response to concerns about 
the price and availability of nitrogen fertilizer. 

www.gao.gov/cgi-bin/getrpt?GAO-03-1148.

To view the full product, including the scope and methodology, click 
on the link above. For more information, contact Jim Wells at (202) 
512-3841, wellsj@gao.gov.

[End of section]

Contents:

Letter: 

Results in Brief: 

Background: 

Higher Natural Gas Prices Have Contributed to Higher Nitrogen 
Fertilizer Prices and Reduced Domestic Production but Have Not Affected 
Availability of Fertilizer: 

Federal Government Has a Limited Role in Managing the Impact of Natural 
Gas Prices on the Fertilizer Market: 

Observations: 

Agency Comments: 

Appendixes:

Appendix I: Objectives, Scope, and Methodology: 

Appendix II: GAO Contacts and Staff Acknowledgments: 

GAO Contacts: 

Staff Acknowledgments: 

Tables:

Table 1: U.S. Nitrogen Supply and Demand, June 30, 1996-2002: 

Table 2: Average Corn Prices, 1996-2001: 

Table 3: Average Costs of Materials Used per Acre on Corn Farms, 1996-
2001: 

Figures:

Figure 1: Anhydrous Ammonia and Natural Gas Prices, 1998-2003: 

Figure 2: Urea, UAN, and Natural Gas Prices, January 1998-March 2003: 

Figure 3: Prices of Anhydrous Ammonia in the U.S. Gulf Port and Mid 
Cornbelt Relative to Natural Gas Prices, January 1998-March 2003: 

Figure 4: Farmer Prices for Nitrogen Fertilizer Relative to Natural Gas 
Prices, January 1998-March 2003: 

Figure 5: Nitrogen Fertilizer Availability, 2001: 

Abbreviations: 

CFTC: Commodity Futures Trading Commission:

EIA: Energy Information Administration:

ERS: Economic Research Service:

FERC: Federal Energy Regulatory Commission:

NASS: National Agricultural Statistics Service:

TFI: The Fertilizer Institute:

UAN: urea ammonium nitrate:

USDA: U.S. Department of Agriculture:

Letter September 30, 2003:

The Honorable Tom Harkin 
Ranking Democratic Member 
Committee on Agriculture, Nutrition and Forestry 
United States Senate:

Dear Senator Harkin:

Nitrogen, the plant nutrient and fertilizer component most widely 
applied by American farmers, is essential for maintaining the high 
yields achieved for major crops such as corn, wheat, and cotton in this 
country. Natural gas is a key component in the production of nitrogen, 
and the cost of natural gas can account for up to 90 percent of 
nitrogen fertilizer production costs. When natural gas prices in this 
country increased in late 2000 and early 2001, U.S. fertilizer 
producers reported financial losses resulting from the significant 
increase in their costs of producing nitrogen fertilizer. These higher 
production costs also made it difficult for U.S. producers to compete 
with foreign nitrogen fertilizer producers, who could buy natural gas 
at lower prices and export their products to the United States. At 
about the same time, concerns arose that the nation's farmers would 
face much higher nitrogen fertilizer prices--and even that there might 
not be an adequate supply of fertilizer to satisfy farmers' demand at 
any price. Such an outcome was considered possible if U.S. fertilizer 
producers were forced to significantly decrease their production, 
because in recent years domestic producers have supplied more than one-
half of the nitrogen fertilizer used by American farmers. According to 
fertilizer industry officials, higher natural gas prices in 2003 are 
again having a negative financial impact on the U.S. nitrogen 
fertilizer industry, threatening to irreversibly cripple it.

In this context, you asked us to determine (1) how the price of natural 
gas affects the price, production, and availability of fertilizer and 
(2) what role the federal government plays in managing the impact of 
natural gas prices on the U.S. fertilizer market. To address the first 
issue, we examined government and industry price data pertaining to 
natural gas and nitrogen fertilizer to determine how nitrogen 
fertilizer prices, both major market 
spot prices[Footnote 1] and retail prices paid by farmers, behaved when 
the price of natural gas increased in 2000-2001 and again in early 
2003. Specifically, we determined the extent to which a correlation 
exists between the price of natural gas at the Henry Hub[Footnote 2] 
and prices for three major types of nitrogen fertilizer products: 
anhydrous ammonia, urea, and urea ammonium nitrate (UAN). We selected 
these three products because they are widely used by American farmers. 
We also examined data obtained from the Department of Commerce and 
industry sources to determine how nitrogen fertilizer production 
behaved when natural gas prices spiked in 2000-2001 and the results of 
a U.S. Department of Agriculture (USDA) survey aimed at determining how 
farmers reacted to higher fertilizer prices in 2001. To determine how 
higher natural gas prices have affected the supply of nitrogen 
fertilizer, we obtained the results of a second USDA survey aimed at 
determining the availability of fertilizer. In addition, we analyzed 
sources, supplies, and consumption of nitrogen from fertilizer years 
1996 through 2002.[Footnote 3] To address the second objective, we 
reviewed the responsibilities of federal agencies relevant to the 
natural gas and fertilizer markets and their efforts to monitor and 
collect information on these markets. We also reviewed relevant 
documents provided by agriculture and fertilizer industry 
representatives and interviewed these officials to obtain their views 
on what actions, if any, the federal government should take to mitigate 
the effects of high natural gas prices on the U.S. fertilizer market. 
We performed our review from February through August 2003 in accordance 
with generally accepted government auditing standards. A detailed 
description of our objectives, scope, and methodology is contained in 
appendix I.

Results in Brief:

Higher natural gas prices have contributed to higher nitrogen 
fertilizer prices and reduced domestic production, but supplies of 
fertilizer have been adequate during periods of high natural gas prices 
in the past primarily because of increased imports. For example, 
between January 2000 and January 2001, the average price of natural gas 
increased by more than 300 percent, from $2.52 to $10.16 per mmBtu. 
Because natural gas is the most costly component used in manufacturing 
nitrogen fertilizer, the higher gas prices led to higher prices for 
nitrogen fertilizer. For example, between January 2000 and January 
2001, the U.S. Gulf Port spot price for anhydrous ammonia, one of the 
most commonly used nitrogen fertilizers, increased by 144 percent, from 
$119 to $290 per ton. Higher natural gas prices during 2001 led to 
higher production costs for U. S. nitrogen fertilizer producers and 
this in turn led to a 25 percent reduction in domestic nitrogen 
production in 2001. Despite this significant decline in production, a 
USDA survey found the supply of nitrogen fertilizer was adequate to 
meet farmers' demand. According to this survey, conducted from April to 
June 2001, while nitrogen fertilizer supplies were below normal early 
in the year, they had returned to normal levels by June. Our analysis 
shows that the demand for nitrogen fertilizer was met in 2001 because 
(1) U.S. production was supplemented by an increase of about 43 percent 
in nitrogen imports and (2) agricultural consumption of nitrogen 
fertilizer decreased from 12.3 million tons in 2000 to 11.5 million 
tons in 2001. According to industry officials, gas prices in 2003 are 
again resulting in unacceptably high production costs and, as a result, 
a decline in production levels is occurring.

The federal government has a limited role in managing the impact of 
natural gas prices on the U.S. fertilizer market. Although the federal 
government does not set natural gas prices, three federal agencies--(1) 
the Federal Energy Regulatory Commission, (2) the Commodities Futures 
Trading Commission, and (3) the Energy Information Administration--are 
responsible for ensuring that natural gas prices are determined in a 
competitive and informed marketplace. Moreover, the federal government 
has no role in controlling fertilizer prices, and nitrogen fertilizer 
products imported from other countries are generally not subject to 
U.S. trade restrictions, such as quotas or tariffs. However, as part of 
its overall mission, USDA monitors developments in the agricultural 
sector that could affect farmers. Regarding the fertilizer market, USDA 
collects information on fertilizer prices and, in 2001, in response to 
concerns about fertilizer prices and availability, conducted two 
surveys of the fertilizer market. These surveys showed that there was 
no problem with fertilizer availability in 2001, and most farmers 
surveyed did not reduce their use of nitrogen fertilizer.

Background:

Natural gas is a key feedstock in the manufacturing of nitrogen for 
which there is no practical substitute. Manufactured nitrogen--also 
known as anhydrous ammonia--is used as a fertilizer itself and is also 
the primary building block used to manufacture all other nitrogen-based 
fertilizers. Some of this nitrogen also is used for industrial purposes 
such as promoting bacterial growth in waste treatment plants, making 
plastics, and as a refrigerant. U.S. manufacturers supplied almost 14 
million tons of nitrogen during fertilizer year 2002 and an additional 
7 million tons were imported. Fifty-six percent of the total nitrogen 
supply was consumed by U.S. agricultural demands. Since natural gas is 
the most costly component of nitrogen, the profitability of the U.S. 
nitrogen fertilizer industry depends, to a large degree, on the price 
of natural gas in the United States. As we reported in December 
2002,[Footnote 4] natural gas prices can be volatile, and small shifts 
in the supply of or demand for gas are likely to continue to cause 
relatively large price fluctuations. In addition to facing a volatile 
natural gas market, which sometimes leads to price spikes, America's 
nitrogen fertilizer producers must also compete in a marketplace where 
many competitors pay much lower prices for natural gas. For example, 
industry data show that recently, when the U.S. market price for 
natural gas was $5 per mmBtu, lower gas prices were available to 
nitrogen fertilizer producers in other parts of the world. The price of 
gas in the Middle East was 60 cents per mmBtu; in North Africa, 40 
cents; in Russia, 70 cents; and in Venezuela, 50 cents. According to 
The Fertilizer Institute (TFI),[Footnote 5] fertilizer products operate 
in a world market, and U.S. prices are influenced by numerous variables 
other than the price of natural gas in the United States.

Higher Natural Gas Prices Have Contributed to Higher Nitrogen 
Fertilizer Prices and Reduced Domestic Production but Have Not Affected 
Availability of Fertilizer:

Because the cost of natural gas accounts for such a large percentage--
up to 90 percent--of the total costs of manufacturing nitrogen 
fertilizer, nitrogen fertilizer prices tend to increase when gas prices 
increase. When gas prices increased in 2001 and 2003, prices for 
nitrogen fertilizers increased throughout the marketing chain. The 
higher natural gas prices in 2001 also led to higher production costs 
for the U.S. nitrogen fertilizer manufacturing industry and resulted in 
a significant reduction in the amount of nitrogen produced in this 
country that year. Despite this decline in the production of nitrogen, 
supplies of nitrogen fertilizer were adequate to meet farmers' needs in 
2001 primarily because of a significant increase in imported nitrogen.

Natural Gas and Nitrogen Fertilizer Prices Are Closely Related:

Higher natural gas prices have contributed to higher prices for 
nitrogen fertilizer throughout the marketing chain. When gas prices 
increased significantly in 2001 and 2003, spot market prices, as well 
as the prices farmers paid for fertilizer, increased for all three 
nitrogen-based products included in our analysis--anhydrous ammonia, 
urea, and UAN. Further, the high prices seen in 2001 could have been 
even higher, if the volume of fertilizer imports had not increased to 
compensate for the reduction in domestic production of nitrogen. The 
relationship between gas prices and fertilizer prices was the strongest 
for anhydrous ammonia, at least in part, because anhydrous ammonia 
contains the highest concentration of nitrogen of the three fertilizer 
products--82 percent--and natural gas is by far the most costly 
component used in manufacturing nitrogen. Anhydrous ammonia is the 
nitrogen-based fertilizer used most often in the United States, and is 
also the primary building block for urea and UAN. As shown in figure 1, 
prices for anhydrous ammonia and natural gas prices moved closely in 
relation to each other during the period from January 1998 to March 
2003. When gas prices increased or decreased, the spot market price for 
ammonia tended to follow the same trend. More specifically, both the 
price of natural gas and the price of ammonia peaked in January 2001 
and again in March 2003. Closer review of the data shows that the 
monthly price of natural gas in January 2000 of $2.52 per mmBtu had 
risen 1 year 
later to $10.16 per mmBtu, an increase of 303 percent. Over the same 
time period, the price of anhydrous ammonia rose from $119 per ton to 
$290 per ton, an increase of 144 percent.[Footnote 6]

Figure 1: Anhydrous Ammonia and Natural Gas Prices, 1998-2003:

[See PDF for image]

[End of figure]

From January 1998 to March 2003, prices of urea and UAN also reflected 
natural gas prices. However, as shown in figure 2, the relationship 
between the two was not as close as that between natural gas and 
anhydrous ammonia prices because urea and UAN contain considerably less 
nitrogen than anhydrous ammonia: 46 percent and 32 percent nitrogen, 
respectively. Because urea and UAN prices reflect lower nitrogen 
concentrations, they did not always move in direct relationship with 
natural gas prices. For example, in May 1998, urea prices increased to 
$162 per ton, while gas prices remained basically flat.

Figure 2: Urea, UAN, and Natural Gas Prices, January 1998-March 2003:

[See PDF for image]

Note: UAN prices are shown in dollars per ton for a 32 percent nitrogen 
solution.

[End of figure]

Moreover, the prices of nitrogen fertilizer can differ depending upon 
how much further along the marketing chain prices are recorded. For 
example, as shown in figure 3, the price for anhydrous ammonia in the 
Mid Cornbelt, where this fertilizer is primarily used, was higher than 
the price in the U.S. Gulf. This difference reflects the cost of 
transporting the ammonia from the Gulf, where it is produced, to the 
Mid Cornbelt. Also, changes in the price of nitrogen fertilizer can lag 
behind changes in natural gas prices, depending upon where in the 
marketing chain prices are recorded. For example, as shown in figure 3, 
the price for anhydrous ammonia in the Mid Cornbelt peaked in February 
2001--about 1 month after natural gas prices spiked that year. Other 
increases and decreases in the price of Mid Cornbelt ammonia lagged 
behind natural gas price changes on other occasions. We believe these 
lags reflect the time associated with transporting the fertilizer from 
its point of origin to the farmers who ultimately use the product.

Figure 3: Prices of Anhydrous Ammonia in the U.S. Gulf Port and Mid 
Cornbelt Relative to Natural Gas Prices, January 1998-March 2003:

[See PDF for image]

[End of figure]

Retail prices for nitrogen fertilizer, or those prices paid by farmers, 
also tend to rise sharply when natural gas prices increase. As shown in 
figure 4, the USDA-reported farmer prices for nitrogen fertilizer 
reflected the natural gas price spikes that occurred in January 2001 
and March 2003. However, the 2001 spike in fertilizer prices lagged 
behind the increase in gas prices by about 1 month. The February 2001 
price for nitrogen fertilizer was about 79 percent higher than it was 
the previous year.

Figure 4: Farmer Prices for Nitrogen Fertilizer Relative to Natural Gas 
Prices, January 1998-March 2003:

[See PDF for image]

Note: Nitrogen fertilizer prices were calculated using USDA price 
indices and the amount of nitrogen contained in anhydrous ammonia, 
urea, and UAN.

[End of figure]

Furthermore, according to USDA data, the average U.S. farm-level price 
for nitrogen fertilizer during the spring, when farmers' demand for 
nitrogen fertilizer is the highest, tracked natural gas prices. 
Specifically, the April monthly price for natural gas increased 
approximately 84 percent from April 2000 to April 2001. Over the same 
time period, the April farm-level price for anhydrous ammonia increased 
76 percent from $227 to $399 per ton. By April 2002, gas prices had 
decreased by 39 percent, and ammonia prices had dropped by 37 percent 
from the previous year's level. In April 2003, the price of natural gas 
was again higher, increasing by 48 percent, and the average farm-level 
price of anhydrous ammonia followed this trend by increasing 49 
percent. However, it is difficult to determine the extent of financial 
harm farmers suffered because of increased fertilizer prices in 2001. A 
USDA study directed at determining how corn farmers responded to higher 
fertilizer prices in 2001 found that about 34 percent of the responding 
producers of corn--a crop that requires large quantities of nitrogen 
fertilizer--purchased a majority of their nitrogen fertilizer at prices 
that were set prior to January 2001 and, therefore, were not affected 
by the sharp rise in fertilizer prices that year. Further, these 
producers were among the largest corn-producing farms and applied the 
most nitrogen fertilizer per acre. Eleven percent of the corn producers 
that responded to the USDA survey reported adjusting their nitrogen 
application rates or practices in response to higher prices, and the 
remaining 55 percent of respondents--generally smaller corn farms that 
applied the least amount of nitrogen fertilizer--reported they took no 
action in response to higher nitrogen fertilizer prices in 2001.

Higher Natural Gas Prices Had Financial Consequences for U.S. Nitrogen 
Fertilizer Producers and Led to Reduced Production:

The sharp rise in gas prices in 2001 had financial consequences for the 
U.S. nitrogen fertilizer manufacturing industry because of the sharp 
increase in their production costs. These higher production costs, 
which could not be recovered through higher fertilizer prices, led to 
plant closures and a significant reduction in domestic nitrogen 
production. According to industry data, several companies that 
manufacture nitrogen fertilizer reported decreased revenues or 
financial losses in 2001, and each cited higher natural gas prices as 
contributing to or causing the financial consequences. For example, one 
large interregional cooperative that produces nitrogen fertilizer for 
U.S. farmers and ranches reported a loss of more than $60 million in 
2001. The company's 2001 annual report cited high natural gas prices as 
a primary reason for the financial loss.

Industry data obtained from the International Fertilizer Development 
Center[Footnote 7] showed that between January 2001 and June 2003, 
eight U.S. nitrogen fertilizer manufacturers permanently closed their 
plants, and a ninth plant had not operated since 2001. Industry 
officials also told us that natural gas prices in 2003 have remained 
well above historic averages and are continuing to exact a financial 
toll on the domestic nitrogen fertilizer manufacturing industry. These 
officials cite the fact that, in June 2003, the U.S. industry was 
operating at only 50 percent of capacity as evidence of this toll. 
Further, they said the industry has suffered through several years of 
extreme financial hardship, caused in part by higher gas prices driving 
up production costs and foreign competitors who have access to less 
expensive natural gas and, if gas prices in this country remain 
relatively high, more U.S manufacturers are likely to curtail nitrogen 
production, and some could permanently shut down their plants.

The production and consumption of fertilizer is often measured by the 
amount of nutrient content in the fertilizer applied. For nitrogen 
fertilizer products, the primary nutrient that is measured is nitrogen. 
Manufacturers supply nitrogen that is consumed in both the agricultural 
and industrial sectors. Table 1 below provides estimates of nitrogen 
supply and demand in the United States over the last 7 years, including 
the nitrogen nutrient content in fertilizer products consumed by the 
agricultural sector. As the price of natural gas, the key component in 
the manufacturing of nitrogen spiked in 2001, nitrogen production fell. 
As shown in table 1, U.S. manufacturers produced 25 percent less 
nitrogen in 2001 than in 2000.

Table 1: U.S. Nitrogen Supply and Demand, June 30, 1996-2002:

000 tons.

Producers beginning inventory; 1996: 2,415; 1997: 
2,047; 1998: 1,799; 1999: 1,956; 2000: 
2,585; 2001: 1,856; 2002: 2,468.

Production; 1996: 14,469; 1997: 14,593; 
1998: 15,092; 1999: 14,634; 2000: 14,186; 
2001: 10,583; 2002: 11,519.

Imports; 1996: 4,963; 1997: 4,497; 1998: 
5,066; 1999: 6,114; 2000: 6,289; 2001: 
8,978; 2002: 7,273.

Total supply; 1996: 21,847; 1997: 21,137; 
1998: 21,957; 1999: 22,704; 2000: 23,060; 
2001: 21,417; 2002: 21,260.

Consumption; 1996: 16,813; 1997: 16,965; 
1998: 17,028; 1999: 17,270; 2000: 17,254; 
2001: 16,373; 2002: 16,809.

Agricultural; 1996: 12,303; 1997: 12,352; 
1998: 12,313; 1999: 12,452; 2000: 12,334; 
2001: 11,535; 2002: 12,009.

Industrial; 1996: 4,510; 1997: 4,613; 
1998: 4,715; 1999: 4,818; 2000: 4,920; 
2001: 4,838; 2002: 4,800.

Exports; 1996: 3,292; 1997: 3,365; 1998: 
3,390; 1999: 3,458; 2000: 3,442; 2001: 
2,768; 2002: 2,945.

Producers ending inventory; 1996: 2,047; 1997: 
1,799; 1998: 1,956; 1999: 2,585; 2000: 
1,856; 2001: 2,468; 2002: 1,690.

Total demand; 1996: 22,152; 1997: 22,129; 
1998: 22,374; 1999: 23,313; 2000: 22,552; 
2001: 21,609; 2002: 21,444.

Sources: GAO analysis of Department of Commerce, Bureau of Census, and 
TFI data.

Note: Total supply and total demand differ primarily because the 
components are derived from several independent sources, as explained 
in appendix I.

[End of table]

Imports Have Helped Maintain Availability of Nitrogen Fertilizer:

Despite the significant decline in domestic production of nitrogen in 
2001, supplies of nitrogen fertilizer were adequate to meet farmers' 
demand that year primarily because of an increase in imports. USDA 
collected additional survey information from April to June 2001 to 
determine whether farmers were facing problems in obtaining nitrogen 
fertilizer. The results of this survey show that the supply of nitrogen 
fertilizer was adequate to meet farmers' 2001 demand. As shown in 
figure 5, while nitrogen fertilizer supplies were below normal in 
several states in April 2001, they had returned to normal levels in all 
but one state by June of that year. Nationally, nitrogen fertilizer 
supplies were at 92 percent of normal levels in early April 2001, while 
only 12 states reported supplies at less than 90 percent of normal 
levels. Only two states--Pennsylvania and New Jersey--reported supplies 
at less than 80 percent of normal levels. However, by early June 
nitrogen fertilizer supplies were at 97 percent of normal levels 
nationally, and all but one state reported supplies at 95 percent or 
more of normal levels. By June 30, 2001, USDA officials concluded that 
there were sufficient supplies of nitrogen fertilizer, and they stopped 
the survey. Furthermore, USDA did not conduct a similar survey in 2003, 
when gas prices and fertilizer prices again increased, because it was 
unaware of any concerns about the availability of nitrogen fertilizer.

Figure 5: Nitrogen Fertilizer Availability, 2001:

[See PDF for image]

[End of figure]

The results of USDA's survey are consistent with our analysis, which 
found that although domestic production of nitrogen declined 25 percent 
in 2001, the overall demand was met primarily because imports increased 
by about 43 percent. As shown in table 1, nitrogen imports increased 
from 6.3 million tons in 2000 to approximately 9 million tons in 2001. 
Although most nitrogen fertilizer imported into the United States has 
for the past several years come from Canada, the amount of nitrogen 
fertilizer imported from Canada decreased by almost 13 percent in 2001. 
On the other hand, nitrogen fertilizer imports from Trinidad Tobago, 
Venezuela, and Ukraine increased by 19 percent, 59 percent, and 469 
percent, respectively, in 2001. The price of natural gas in these three 
countries was considerably lower than the price of gas in the United 
States; thus, fertilizer producers in these countries were able to 
produce nitrogen fertilizer at much lower costs than domestic 
producers.

Table 1 also shows that domestic agricultural consumption of nitrogen 
decreased from 12.3 million tons in 2000 to 11.5 million tons in 2001-
-or about 7 percent. At least part of this reduction can be attributed 
to the impact of higher fertilizer prices on the country's farmers. For 
example, according to USDA's survey aimed at determining how corn 
farmers responded to higher fertilizer prices in 2001, 11 percent of 
responding farmers reported they adjusted their nitrogen fertilizer 
rates or practices in response to higher nitrogen fertilizer prices 
that year. About 80 percent of these farmers reduced their nitrogen 
fertilizer use by an average of 23 percent.

Federal Government Has a Limited Role in Managing the Impact of Natural 
Gas Prices on the Fertilizer Market:

The federal government has a limited role in managing the impact of 
natural gas prices on the domestic fertilizer market. For example, the 
government does not determine the price of natural gas; however, two 
federal agencies--the Federal Energy Regulatory Commission (FERC) and 
the Commodity Futures Trading Commission (CFTC)--play important roles 
in promoting competitive natural gas markets by deterring 
anticompetitive actions. In addition, the Energy Information 
Administration (EIA) is responsible for obtaining information about and 
analyzing trends in the natural gas market that are used by industry 
and government decision makers. As with natural gas, the federal 
government does not set or control prices for nitrogen fertilizer. 
However, as part of its overall mission, USDA does monitor developments 
in the agricultural sector that could affect farmers. Regarding the 
fertilizer market, USDA collects, analyzes, and disseminates 
information on fertilizer prices and uses and, in 2001, collected 
additional information on the supply of nitrogen fertilizer and how 
higher fertilizer prices affected farmers. Lastly, USDA provides 
insurance and commodity price support programs to assist America's 
farmers in managing risks associated with crop yields and revenues.

Federal Role in the Natural Gas Market Is Focused on Ensuring a 
Competitive Marketplace:

As we reported in December 2002, in today's deregulated market the 
federal government does not control the price of natural gas. However, 
two federal agencies are responsible for ensuring that natural gas 
prices are determined in a competitive marketplace. Specifically, FERC 
plays a major role in overseeing the natural gas marketplace to ensure 
that prices are just and reasonable and free from fraud and market 
manipulation. Similarly, CFTC exercises regulatory oversight of natural 
gas derivatives[Footnote 8] that are traded on federally regulated 
exchanges, such as the New York Mercantile Exchange, to protect traders 
and the public from fraud, manipulation, and abusive practices.

Following the price increases that occurred in the natural gas market 
during 2000-2001, both FERC and CFTC initiated investigations into 
possible fraud or manipulation. In August 2002, FERC reported that it 
had found indications that several companies may have manipulated spot 
prices upward for natural gas delivered to California during 2000-
2001.[Footnote 9] In March 2003, FERC reported that it had found 
evidence of manipulation of both electricity and natural gas markets, 
and that spot market gas prices were not produced by a well-functioning 
competitive market.[Footnote 10] FERC staff made several 
recommendations to FERC commissioners aimed at correcting the 
deficiencies they found in the electric as well as the natural gas 
market. In a statement before the National Energy Marketers Association 
on April 4, 2003, the Chairman of CFTC acknowledged that the commission 
had imposed monetary penalties and filed complaints in federal court 
against several companies in connection with false reporting and 
attempts to manipulate natural gas prices and operating an illegal 
futures exchange. The Chairman also said that CFTC was actively engaged 
in other energy sector investigations, and further charges might be 
filed.

Following the price spike that occurred in the natural gas market in 
February 2003, FERC and CFTC again undertook investigations of possible 
market manipulation. On July 23, 2003, they issued a joint statement 
saying that neither investigation had identified evidence of market 
manipulation. FERC concluded that gas prices had risen in apparent 
response to underlying supply and demand conditions and in a manner 
consistent with those conditions.[Footnote 11] CFTC said that it found 
nothing that suggested manipulative activity in the natural gas futures 
and options market during the week of February 24, 2003.

A third federal agency--EIA--analyzes energy price movements and 
provides market information that gas industry analysts use as an 
indicator of both supply and demand. For example, in May 2002, EIA 
began reporting estimates on the volume of gas in storage, which is a 
key predictor of future natural gas prices. EIA also provides weekly 
and monthly updates on the natural gas market and special reports on 
various issues affecting the gas market. In its August 2003 energy 
outlook, EIA reported that gas prices at the Henry Hub, one of the 
largest gas market centers in the United States, fell below $4.70 per 
mmBtu during the last week in July 2003. This was considered 
significant because these prices had been considerably above $5 per 
mmBtu on a monthly basis since the beginning of the year. However, EIA 
advised that gas prices are at risk for volatility and industrial users 
who rely on spot market purchases for their gas, such as nitrogen 
fertilizer producers, face the greatest risk of higher natural gas 
prices.

Federal Role in the Fertilizer Market Is Limited:

The federal government does not control prices for nitrogen fertilizer, 
and nitrogen fertilizer products imported from other countries are 
generally not subject to U.S. trade restrictions, such as quotas and 
tariffs.[Footnote 12] However, as part of its overall mission, USDA 
does monitor and report on developments in the agricultural sector that 
could affect farmers and offers certain programs to help farmers manage 
the risks associated with crop yield and revenues. The National 
Agricultural Statistics Service (NASS) collects information on 
agricultural acreage, production, stocks, prices, income, and 
information on fertilizer prices and uses. For example, the annual 
Agricultural Chemical Usage report provided by NASS includes 
information for targeted crops by major producing states on how much 
and what type of fertilizer was applied per acre. NASS also reports 
monthly price indices for three major fertilizer types--nitrogen, 
phosphate, and potassium--and actual prices paid by farmers for several 
fertilizer products in April of each year.

In addition to its routine surveys, USDA collected additional 
information in 2001 about nitrogen fertilizer availability and prices. 
According to officials from the Office of the Chief Economist, this 
information was collected because Congress and others had raised 
concerns about higher natural gas prices and the possible impact these 
prices would have on the availability and price of fertilizer. In order 
to collect this information, questions were added to USDA's ongoing 
Crop Progress survey aimed at determining the availability of nitrogen 
fertilizer in 2001 and to the Agricultural Resource Management Survey 
to determine how corn growers responded to the higher nitrogen 
fertilizer prices that occurred in 2001. The results of this additional 
survey information are discussed elsewhere in the report.

USDA also offers insurance and commodity price support programs to help 
farmers manage risk associated with crop yields and revenues, but it 
currently does not offer similar programs to cover the risks associated 
with farm production costs, such as the cost of fertilizer. For 
example, in 2002, USDA's insurance program covered crops valued at $41 
billion, and commodity price support payments have averaged more than 
$10 billion per year since 1996. According to USDA officials, the 
agency does not offer insurance to cover the risks associated with farm 
production costs because these risks tend to be small compared with the 
risks associated with crop prices. Since a farmer's income per acre 
from a crop equals the crop price times the yield, changes in either 
crop price or yield are directly and fully reflected in a farmer's 
income. As shown in table 2, crop prices can change significantly over 
time and from year to year. From 1996 to 2001 the average price of corn 
declined by $.98 per bushel, or 35 percent, and average corn prices 
declined by $.61 per bushel--24 percent--from 1997 to 1998. Overall, 
from 1996 to 2001, average corn yields increased only 11 percent--from 
130 bushels per acre to 144 bushels per acre. In addition, while 
national average yields are relatively stable from year to year, the 
actual yields for individual farmers can vary significantly from year 
to year as a result of natural causes, such as weather conditions and 
the extent of loss caused by insects and diseases.

Table 2: Average Corn Prices, 1996-2001:

Crop prices/yields: Price (dollars per bushel at harvest; 1996: 2.82; 
1997: 2.52; 1998: 1.91; 1999: 1.69; 2000: 1.77; 2001: 1.84.

Crop prices/yields: Yield (bushels per planted acre); 1996: 130; 1997: 
130; 1998: 136; 1999: 135; 2000: 138; 2001: 144.

Source: USDA, Economic Research Service.

[End of table]

In contrast, a farmer faces fewer risks with costs of production 
because these costs tend to remain stable from year to year. As shown 
in table 3, total production costs per acre for a corn farm remained 
relatively stable from 1996 through 2001, and changes in different cost 
categories often offset one another. For example, although average 
fertilizer costs increased by $8.68 per acre from 2000 to 2001, this 
large increase was offset by a decrease of $8.24 in fuel, lube, and 
electricity costs. Other production costs also decreased and, as a 
result, total production costs decreased by $3.84, or about 2 percent.

Table 3: Average Costs of Materials Used per Acre on Corn Farms, 1996-
2001:

Cost categories: Fertilizer; 1996: $47.04; 1997: $46.21; 1998: $41.44; 
1999: $38.75; 2000: $39.04; 2001: $47.72.

Cost categories: Seed; 1996: 26.65; 1997: 28.71; 1998: 30.02; 1999: 
30.29; 2000: 30.02; 2001: 32.34.

Cost categories: Chemicals; 1996: 27.42; 1997: 26.87; 1998: 27.36; 
1999: 28.40; 2000: 28.82; 2001: 26.44.

Cost categories: Fuel, lube, and electricity; 1996: 24.43; 1997: 24.55; 
1998: 22.96; 1999: 23.04; 2000: 29.12; 2001: 20.88.

Cost categories: Repairs; 1996: 15.78; 1997: 16.17; 1998: 16.65; 1999: 
17.17; 2000: 17.55; 2001: 13.76.

Cost categories: Custom operations; 1996: 11.30; 1997: 11.30; 1998: 
11.29; 1999: 11.37; 2000: 11.48; 2001: 10.94.

Cost categories: Manure; 1996: 0.60; 1997: 0.56; 1998: 0.51; 1999: 
0.49; 2000: 0.48; 2001: 2.65.

Cost categories: Interest on operating capital; 1996: 3.86; 1997: 3.96; 
1998: 3.61; 1999: 3.50; 2000: 4.53; 2001: 2.60.

Cost categories: Other variable cash expenses; 1996: 0.30; 1997: 0.32; 
1998: 0.31; 1999: 0.31; 2000: 0.31; 2001: 0.22.

Cost categories: Soil conditioners (lime); 1996: 0.16; 1997: 0.16; 
1998: 0.16; 1999: 0.17; 2000: 0.16; 2001: 0.12.

Cost categories: Total costs; 1996: $157.54; 1997: $158.81; 1998: 
$154.31; 1999: $153.49; 2000: $161.51; 2001: $157.67.

Source: USDA, Economic Research Service.

[End of table]

Similarly, although USDA provides information to farmers through the 
Cooperative State Research, Education and Extension Service to help 
them participate in farm commodity futures markets, there is relatively 
little information regarding farm production costs, such as fertilizer. 
According to a state extension service official, the extension service 
has issued several publications that provide information on farm 
commodity futures markets because farmers are generally familiar with 
these markets and have access to the information needed to participate 
successfully in these markets. However, the extension service generally 
does not encourage farmers to participate in futures markets involving 
farm production cost items, such as fuels, because farmers are not as 
familiar with these markets. Instead, farmers generally use various 
prepayment methods to control the costs of items used in producing 
crops.

Observations:

Natural gas is the most costly ingredient used in manufacturing 
nitrogen fertilizer products. However, the price of natural gas can 
vary significantly in different markets throughout the world. 
Unfortunately for domestic nitrogen fertilizer manufacturers, the price 
of natural gas in the United States can far exceed its price in other 
parts of the world. As a result, domestic manufacturers are at a 
competitive disadvantage when domestic natural gas prices rise. 
Manufacturers can close plants in response to periodic price spikes and 
resume production when prices drop again, but higher prices sustained 
over the long term may result in more permanent curtailment of domestic 
production. In the past, farmers' needs for fertilizer have been met by 
increases in imports when domestic production has been curtailed, as it 
was in 2001. However, it remains to be seen how well the market will 
respond to further reductions in the domestic production of nitrogen 
fertilizer that may be caused by more sustained higher natural gas 
prices in the future. Earlier this year, increased natural gas prices 
once again caused higher production costs for the nation's fertilizer 
manufacturing industry, which in turn contributed to a reduction in the 
amount of nitrogen being produced and an increase in nitrogen 
fertilizer prices. Although it is too early to determine whether these 
higher gas prices will have the same adverse effect on the fertilizer 
manufacturing industry as higher gas prices did in 2001, some within 
the industry contend that continuing higher gas prices are threatening 
the industry.

Agency Comments:

We provided USDA and TFI with a draft of this report for review and 
comment. We received oral comments from USDA and TFI officials, who 
agreed with our facts and observations.

:

As agreed with your office, unless you publicly announce the contents 
of this report earlier, we plan no further distribution until 30 days 
from the report date. At that time, we will send copies to the USDA 
Secretary, The Fertilizer Institute, and other interested parties. We 
also will make copies available to others upon request. In addition, 
the report will be available at no charge on the GAO Web site at 
[Hyperlink, http://www.gao.gov] http://www.gao.gov.

Questions about this report should be directed to me at (202) 512-3841. 
Key contributors to this report are listed in appendix II.

Sincerely yours,

Jim Wells 

Director, Natural Resources and Environment:

Signed by Jim Wells: 

[End of section]

Appendixes:

[End of section]

Appendix I: Objectives, Scope, and Methodology:

In our study of the natural gas and nitrogen fertilizer markets, we 
determined (1) how the price of natural gas affects the price, 
production, and availability of nitrogen fertilizer and (2) the federal 
government's role in managing the impact of natural gas prices on the 
U.S. fertilizer market.

To address these objectives, we reviewed pertinent documents and 
obtained information and views from a wide range of officials from both 
the federal government and the private sector. We interviewed staff 
and/or obtained information from the Department of Agriculture's (USDA) 
Office of the Chief Economist, Economic Research Service, National 
Agricultural Statistics Service, and Cooperative State Research, 
Education and Extension Service; the Department of Commerce; the 
Department of Energy's Energy Information Administration; the Federal 
Energy Regulatory Commission; the Commodity Futures Trading Commission; 
and the International Trade Commission. We also discussed the 
relationship between the natural gas and nitrogen fertilizer markets 
with representatives from various industry organizations, including The 
Fertilizer Institute (TFI); the International Fertilizer Development 
Center; the American Farm Bureau Federation; Agrium Incorporated; CF 
Industries, Incorporated; and Terra Industries, Incorporated.

To determine how the price of natural gas affects the price of nitrogen 
fertilizer, we examined industry-supplied natural gas prices and 
industry, as well as government, price data for nitrogen fertilizer and 
determined how fertilizer prices behaved when gas prices increased in 
2000-2001 and again in 2003. We determined the extent to which a 
correlation existed between the price of natural gas and prices for 
three nitrogen fertilizers, anhydrous ammonia, urea, and urea ammonium 
nitrate, which were included in our analysis because they are widely 
used by American farmers. We compared natural gas and nitrogen 
fertilizer prices for the period January 1998 through March 2003. More 
specifically, we obtained industry prices for natural gas at the Henry 
Hub from Global Insight (USA), Inc. We selected Henry Hub prices 
because this market center is one of the largest in the country and 
often serves as a benchmark for wholesale natural gas prices across the 
country. We obtained monthly spot prices, or the current cash prices at 
which nitrogen-based fertilizers are sold at various locations, from an 
industry source--Green Markets: Fertilizer Market Intelligence Weekly. 
Green Markets, a Pike & Fischer, Inc., publication, collects 
independent spot price quotes for 19 fertilizer commodities every week. 
Our analysis of the market data included fertilizer prices at two major 
market locations: (1) the U.S. Gulf Port, whose prices are considered 
the benchmark for fertilizer prices in North America, and (2) the Mid 
Cornbelt, where large quantities of nitrogen fertilizer are used. In 
addition, we compared the relationship between the prices paid by 
farmers for nitrogen fertilizer and natural gas prices. To do this, we 
calculated the monthly prices paid by farmers for nitrogen fertilizer. 
We used the April prices paid by farmers for anhydrous ammonia, urea 
ammonium nitrate (32 percent nitrogen solution) and urea (46 percent 
nitrogen). Since these prices are reported only once a year in April, 
we applied the monthly prices paid index for nitrogen fertilizer 
published by USDA to the April prices in order to calculate a monthly 
price for nitrogen fertilizer. We did this by using the appropriate 
weights, supplied by USDA, for each of the fertilizer components 
(anhydrous ammonia, urea ammonium nitrate, and urea). The index for 
nitrogen fertilizer is based on the Producer Price Index series (PPI) 
and appropriate subcomponents from the Bureau of Labor Statistics. The 
April fertilizer prices are obtained by survey from establishments 
selling fertilizers to farmers.

To determine the effect of natural gas prices on domestic nitrogen 
fertilizer production, we examined nitrogen inventory, production, and 
consumption data obtained from government and industry sources from 
1996 through 2002. These data (shown in table 1) reflect the estimated 
quantity of nitrogen in the United States, including the nitrogen 
nutrient in several fertilizer products--anhydrous ammonia, ammonium 
nitrate, ammonium sulfate, aqua, nitrogen solutions, urea, and other 
nitrogen materials. The estimated nitrogen production, imports, and 
exports were derived from the Department of Commerce, Bureau of Census, 
quarterly report Inorganic Fertilizer Materials and Related Products 
(MQ325B). The inventory data were taken from a TFI report, Fertilizer 
Record, which reflects the results of a TFI monthly survey of domestic 
nitrogen fertilizer producers. The agricultural consumption data were 
derived from reports filed by fertilizer users with state fertilizer 
control officials. These reports are tabulated by the Association of 
American Plant Food Control Officials, Inc. (AAPFCO) and TFI and 
published by TFI in Commercial Fertilizers. Because of the 
incompleteness of the state fertilizer consumption reports, an unknown 
but significant amount of missing data, particularly for the most 
recent year, are imputed based on historical information by AAPFCO and 
TFI. The estimates described above were used in this report for several 
reasons. First, the estimates of total supply and total demand, which 
reflect the combination of data from several independent sources, 
differ only slightly. Second, the trends in consumption from the trade 
source are consistent with those in the related Census Bureau series. 
Third, these data are widely used by companies that produce nitrogen 
fertilizer. In addition, we reviewed financial reports and other 
industry documents that describe how the nitrogen manufacturing 
industry responded to higher natural gas prices and interviewed 
industry and government officials to obtain their views and comments.

In determining the effect of higher natural gas prices on the supply of 
nitrogen fertilizer, we relied primarily on the results of a USDA 
survey on fertilizer availability in 2001. According to USDA officials, 
they added questions concerning nitrogen fertilizer supplies to the 
ongoing Crop Progress survey[Footnote 13] because this was the most 
efficient and reliable survey vehicle available on short notice. USDA 
asked respondents to report on the adequacy of nitrogen fertilizer 
supplies that were available to producers in their area. Although the 
responses were subjective, those people providing the responses are 
widely respected as the most knowledgeable about agricultural 
situations in their respective counties. The results of the survey 
questions used to gather information on the availability of nitrogen 
fertilizer were presented in the National Agricultural Statistical 
Service's Crop Progress report dated June 4, 2001. We also examined 
data contained in our supply and demand table (table 1) to determine 
sources, supplies, and consumption of nitrogen fertilizer over the 7-
year period ending in June 2002.

To determine what role the federal government plays in managing the 
impact of natural gas prices on the U.S. fertilizer market, we reviewed 
the responsibilities of federal agencies regarding the natural gas and 
fertilizer markets and their efforts to monitor and collect information 
on these markets. We reviewed relevant documents provided by 
agriculture and fertilizer industry representatives and interviewed 
these officials to obtain their views on what actions, if any, the 
federal government should take to mitigate the effects of high natural 
gas prices on the U.S. fertilizer market. We also reviewed relevant 
documents and interviewed USDA and state extension service officials 
regarding how farmers manage the risks associated with their production 
costs and the federal government's role in assisting farmers in 
managing these risks. Finally, we reviewed the results of a USDA 
analysis of the 2001 Agricultural Resource Management Survey, which was 
used to gather information on how American farmers who grow corn 
responded to the higher nitrogen fertilizer prices in 2001.[Footnote 
14] The results of this analysis were presented in the USDA, Economic 
Research Service's Agricultural Income and Finance Outlook report dated 
September 26, 2002.

We performed our review from February through August 2003 in accordance 
with generally accepted government auditing standards. While we did not 
independently verify the accuracy of natural gas and fertilizer prices 
and other data obtained from industry sources, we did compare these 
data with other relevant data to ascertain the reasonableness of the 
data we used. We also interviewed knowledgeable government and industry 
officials to determine the reasonableness of the data and our use of 
them. We determined that the data were sufficiently reliable for the 
purposes of our report.

[End of section]

Appendix II: GAO Contacts and Staff Acknowledgments:

GAO Contacts:

Jim Wells (202) 512-3841 Mark Gaffigan (202) 512-3168:

Staff Acknowledgments:

In addition to the individuals named above, Carol Bray, James Cooksey, 
Nancy Crothers, Paul Pansini, Robert Parker, and Barbara Timmerman made 
key contributions to this report.

(360306):

:

:

FOOTNOTES

[1] Spot prices are the current cash prices at which fertilizer is sold 
at various locations. For the purposes of our review, we used prices at 
two major market locations: the U.S. Gulf Port, whose price is 
considered the benchmark for fertilizer prices in North America, and 
the Mid Cornbelt. Unless otherwise specified, fertilizer prices 
referred to in this report are Gulf Port prices. 

[2] The Henry Hub is one of the largest gas market centers in the 
United States. Its price often serves as a benchmark for wholesale 
natural gas prices across the country. The price of natural gas is 
commonly measured in dollars per million British thermal units (mmBtu), 
which is approximately 1,000 cubic feet of gas. 

[3] Information on nitrogen and fertilizer production and consumption 
is reported in industry sources on a fertilizer year basis--which 
represents the time from July 1 to June 30. Thus, fertilizer year 2002 
represents the time between July 1, 2001 and June 30, 2002. Unless 
noted, all references to nitrogen and fertilizer production and 
consumption are on a fertilizer year basis.

[4] U.S. General Accounting Office, Natural Gas: Analysis of Changes in 
Market Prices, GAO-03-46 (Washington, D.C.: Dec. 18, 2002).

[5] TFI represents, by voluntary membership, manufacturers, retailers, 
trading firms, and equipment manufacturers of the U.S. fertilizer 
industry. The Institute employs a full-time Washington, D.C. staff in 
various legislative, education, and technical areas.

[6] Although there is a strong correlation between natural gas prices 
and nitrogen fertilizer prices, many other variables influence the 
supply and demand market forces that ultimately determine fertilizer 
prices. In addition, U.S. companies that produce nitrogen use various 
purchasing techniques to manage their natural gas price risks; 
therefore, they do not purchase all their gas at the prevailing market 
price.

[7] The International Fertilizer Development Center is a public, 
nonprofit organization dedicated to increasing agricultural 
productivity through the development and use of sound plant nutrient 
technology. 

[8] These natural gas derivatives are futures and options contracts 
whose value is derived from the price of natural gas itself. These 
contracts can be bought and sold by entities that are interested in 
protecting themselves against increases in the price of natural gas.

[9] FERC, Initial Report on Company-Specific Separate Proceedings and 
Generic Reevaluations: Published Natural Gas Price Data; and Enron 
Trading Strategies, August 2002.

[10] FERC, Final Report on Price Manipulation in Western Markets, March 
2003.

[11] FERC, Report on the Natural Gas Price Spike of February 2003, July 
2003.

[12] Although nitrogen fertilizer is generally imported into the United 
States under a free trade arrangement, the United States International 
Trade Commission has, since 1999, ruled on four cases alleging that 
certain nitrogen fertilizers exported from several countries were being 
sold in the United States at less than fair value. In three of these 
cases --(1) Solid Urea from Armenia, Belarus, Estonia, Lithuania, 
Romania, Russia, Tajikistan, Turkmenistan, Ukraine, and Uzbekistan, 
USITC Pub. 3248, Inv. Nos. 731-TA-339 and 340-A-1 (October 1999); (2) 
Certain Ammonium Nitrate from Russia, USITC Pub. 3338, Inv. No. 731-TA-
856, (August 2000); and (3) Certain Ammonium Nitrate from Ukraine, 
USITC Pub. 3448, Inv. No. 731-TA-894, (August 2001) --the Commission 
found that certain fertilizers imported from the cited countries were 
being sold at prices that materially injured the industry in the United 
States. Therefore, the price of certain nitrogen fertilizers imported 
from Armenia, Belarus, Estonia, Lithuania, Romania, Russia, Tajikistan, 
Turkmenistan, Ukraine, and Uzbekistan was restricted, either by order 
or agreement. These restrictions are still in effect.

[13] USDA, National Agricultural Statistics Service conducts crop 
progress surveys on a weekly basis from early April to the end of 
November to collect specific data and the overall condition of selected 
crops in major producing states. The surveys are nonprobability surveys 
that include a sample of more than 5,000 people who make visual 
observations and have contact with farmers in their counties. 

[14] The Agricultural Resource Management Survey, conducted by USDA's 
Economic Research Service, is an annual, state-by-state survey of farms 
and agricultural commodities conducted to obtain information about the 
financial condition, production practices, resource use, and economic 
well being of America's farm households. Trained enumerators conduct 
personal interviews of a statistical sample of farm operators to 
collect data for this survey. 

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