😫 A Nitrogen Nightmare? + Frozen Coffee Issues, D.C. Decodes Ag Labor, and more...

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Now to the news.

Headlines:

A Potential Nitrogen Nightmare
Can D.C. Fix Ag Labor?
Frozen Coffee - Not What You Think...

The American Farm Bureau is waving a red flag on a fertilizer fiasco that could drain U.S. farmers’ piggy banks.

The culprit? Potential duties on urea ammonium nitrate solutions (UAN).

In early July, CF Holdings, Inc. filed petitions with the U.S. government requesting countervailing and antidumping duty investigations of UAN imports from Russia and Trinidad and Tobago. The duties intend to offset the value of dumping — aka exporters selling in the U.S. at a below-normal value price — and countervailing subsidies.

CF Holdings, the U.S.’s largest UAN producer, claims the countries haven’t been fighting fair, underpricing their product by as much as 433.37%.

The more you know: More than 80% of American UAN fertilizer imports come from Russia and Trinidad and Tobago.

Bad news for the bottom line: Farm Bureau says UAN solutions are the most common nitrogen delivery vehicle, making up nearly half of nitrogen fertilizer usage. 59% of all fertilizer applied to fields is nitrogen. Roughly 25% of operating costs are attributable to UAN solutions… meaning these duties could do major damage to farmers’ bottom lines.

Insult to injury. Fertilizer costs were already projected to increase by roughly 5% between 2021 and 2022. The potential tariffs could make that a double-digit increase.

Quick Hits

→ In other fertilizer news… potash prices jumped 10% from June to reach $501/ton, the highest price in 8 years.

→ A different kind of sticker shock. Almost $28M worth of U.S.-produced sweet potatoes and grapefruit may be blocked from France as the country looks to ban imports bearing stickers that are not home compostable.

→ Have cattle reached a peak? Declining weights (4 pounds down to 859), national grading percentages trending lower, and beef slaughter volumes dropping (estimated to be down 10K this past week) have economists predicting fed cattle numbers will move down going forward.

→ An all-too-familiar headline. Another pork price-fixing case has been settled as JBS USA will pay $20M to close a class-action lawsuit alleging the company violated antitrust laws.

→ Walk the line. European dairy researchers are using motion sensors and sobriety test-like experiments to monitor walking patterns of cows to catch early health issues related to the animal’s gait.

→ #NatureVibes. Fermented protein company Nature’s Fynd closed a $350M Series C round to scale its production of products based on a fungi-derived protein from a microbe discovered in a Yellowstone National Park geothermal spring.

→ Floods wreck Chinese ag. The country’s central Henan province saw its worst flash flooding in centuries as 1.5K+ large scale farms lost 1M+ animals, mainly pigs and poultry.

The struggle is real with the current U.S. labor shortage, and agriculture is certainly not excluded. The sector is feeling the squeeze, and legislators are pushing to reform the guest worker program to help.

The issue at hand: the current H-2A guest worker program is structured for seasonal, not year-round, help.

A proponent’s point: "Employers in Iowa — animal agriculture, agricultural processing — is not a seasonal business, and that's what the H-2A program is for is seasonal workers," Senator Chuck Grassley (R-IA) said. "So I hear from farmers and business(es) who just can't find people to work."

Today there are an estimated 2.5M farmworkers, about half of them undocumented. In March, the House passed the Farm Workforce Modernization Act of 2021, which provides mass amnesty without addressing the core labor issues. Republicans aren’t fond of the bill — and won’t approve it until Democrats secure the border.

Senator Grassley also argued the bill fails to address many of the shortfalls of H-2A. “This will involve expanding the program to cover year-round agricultural industries such as pork, dairy, and agricultural processing. It should also involve streamlining the program, reducing red tape and addressing the high cost of using the program.”

Where does it go from here? More debate on how to structure a bill that would address both worker legalization issues and solve the agricultural labor shortage.

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Iced coffee picked up a new meaning last week, and not in a good way.

Early in the morning on July 20, air temperatures across Brazil’s coffee belt settled at an icy 29 degrees Fahrenheit. That’s the coldest temperature the region has seen since 1994.

And just like chocolate milk does not come from brown cows, frozen coffee plants do not make iced coffee.

Farmers are still assessing the extent of the damage, but early indications are not good. One estimate pegs the damage at 4.5M bags off the 70M bag projection for 2022 exports. But the full impact won’t be known until farmers are able to determine if the plants can be saved or not.

Get in line: Like the Starbucks drive-through, the line of challenges stacked against Brazilian coffee farmers is long. Before the frost, drought conditions plagued this year’s growing season, and futures prices were already high. Following the frost, prices surged another 13%.

Dark roast coming? The coming months will be mega important to the cost of your caffeine habit. Forecasters are predicting a return of La Niña. AKA more drought.

If the forecasts come to fruition, count on prices to keep rising.