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September 2012 Policy Study, Number 12-11

   

Orascom or OraScam? Corporate Income and Property Tax Reform Needed

   

Agriculture in the Heartland

   

 

The new facility will be built on 300 acres near Wever, Iowa, and will be in full production by 2015. It will produce ammonia nitrate, diesel exhaust fluid (DEF), and urea – a liquid fertilizer that can be combined with other crop additives to allow one-pass application. Currently, one-third to one-half of ammonia and urea used for American crops is imported.[13] Over one-half of the nitrogen used is imported, according to the U.S. Department of Agriculture. The fertilizer from this plant will probably be sold in Iowa, Illinois, and Wisconsin. According to the Iowa Farm Bureau, buying locally produced fertilizer instead of imported product will save Iowa farmers over $700 million a year.[14]

 

Because of the increased demand for fertilizer, CHS Inc., a Fortune 500 agribusiness co-op based in St. Paul, Minnesota is also considering building a new fertilizer plant. This plant is also estimated to cost about $1.4 billion. It will be located in Jamestown, North Dakota. CHS is “one of the nation’s largest fertilizer wholesalers,” selling 5.6 million tons annually. Most of their product is also bought in the Middle East and imported. North Dakota is being chosen for this plant because of easy access to natural gas supplies. They are estimating that 2,200 tons of fertilizer will be produced daily and the plant will employ about 100-150 workers – slightly less than the number promised by Orascom in Iowa.[15]

 

According to the International Fertilizer Industry Association (IFIA), demand is “steadily” increasing, up by almost 3 percent in 2011-12 to over 180 metric tons worldwide, with strong demand in both Asia and Latin America. Current projections for fertilizer production growth worldwide are slightly less than 2 percent. Urea demand, especially from India, may grow at 15-30 percent. At the same time, some 250 new plants are in the planning or building stage over the next five years, potentially resulting in some fertilizer surplus by 2015.[16] In June the United States Department of Agriculture reported that American farmers planted over 96 million acres of corn in 2012, “up five percent from 2011.” This is the highest planted acreage since 1937. Soybean acres are up one percent, and wheat up 3 percent.[17] Farmers in the Midwest and upper plains states clearly need an inexpensive, easily accessed source of fertilizer.

 

Though minor in their overall corporate structure, this plant and the purchase of Weitz Construction represent major moves into the heartland of the U.S. and Midwestern agriculture. This results in other questions, especially following the international protests against the U.S.A. and our fundamental First Amendment freedom of speech and religion philosophy. What is the OCI approach to American culture and standards? Will the rights of American citizens working for Iowa Fertilizer Co. be respected and encouraged? Who will be actually running the plant?

 

   

 

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