A group of American ammonia producers - the people who make the stuff that fertilizer is made from - yesterday asked the U.S. government to slap a tariff on ammonia imports from the Soviet Union, claiming that the low-priced imports are putting U.S. producers out of business and threatening the security of American agriculture.
In a petition filed with the International Trade Commission, the U.S. companies said American farmers suddenly have become dangerously dependent on Soviet ammonia imports. Raising the spectre of OPEC control of the world oil market, the U.S. firms warned that America may soon find itself similarly vulnerable to Soviet manipulation of the fertilizer market.
"The security implications here are enormous," said Edward Weidenfeld, a Washington attorney representing the U.S. producers. "We're talking about the stuff that makes food grow."
Thirteen U.S. ammonia producers, accounting for roughly 60 percent of the $2 billion domestic ammonia market, signed the petition. They asked the ITC to investigate the matter and to recommend a tariff or duty that would raise the price of Soviet ammonia imports. It is up to the President to decide what to do.
The complaint is the first of its kind against a Russian product, and only the third action filed under the Trade Act of 1974 seeking protection against imports from a Communist country. The other two involved imports of clothespins and gloves, primarily from the People's Republic of China.
The Soviet Union began exporting ammonia to the United States just two years ago - thanks, ironically to the efforts of an American firm.
Occidental Petroleum Corp., whose chairman Armand Hammer has had numerous business dealings with the Russians over several decades, signed a $20 billion agreement with the Russians in 1973, the effect of which has been to help establish the Soviet Union as a world power in ammonia production.
Under the terms of the agreement, Occidental promised to buy large amounts of ammonia, urea and potash from the U.S.S.R. in return for supplying the Russians with superphosphoric acid, the basic substance from which ammonia is made. The contract is to run for 20 years.
The arrangement has permitted the Soviet Union to capture a sizeable chunk of the U.S. market in a short time. Soviet imports now account for one-third of all ammonia imported into the United States. They represented nearly 4 percent of total U.S. ammonia consumption in the first quarter this year, and that figure is expected to grow to 13 percent by next year, according to the complaining U.S. firms.
The Soviet success has come while many domestic manufacturers are suffering. Thirty two plants, representing 28 percent of last year's U.S. ammonia production, have been forced to close - some temporarily, others permanently. Many other plants are operating at significantly reduced rates, averaging 73.5 percent of capacity according to the petition.
"The problem is severe, and unless prompt import relief is provided, even greater injury will occur," the petition delcares.
The reason for Russia's gains has been low price. A ton of Soviet ammonia now sells for roughly $90 at portside, while U.S. made ammonia sells for about $110 at the plant - and even that is well below what it should be for U.S. producers to earn sufficient profit, according to L.L. (Jake) Jaquier, executive vice president of W.R. Grace & Co. and spokesman for the U.S. industry.
Prices for U.S. made ammonia have been on the rise recently bedause the price of natural gas has gone up, and natural gas accounts for two thirds of the total cost of ammonia production. The price of natural gas used to be controlled by the government, but those controls were lifted in 1977.
Defending its contract with the Russians, Occidental yesterday blamed the troubles U.S. firms were having on their won miscalculations. A company spokesman said some U.S. producers overbuilt in response to a world scare over a fertilizer shortage six years ago.
U.S. capacity for ammonia production was 20.4 million tons last year, but only 17.5 million tons were produced.
"A lot of big companies have built new plants, which only aggravated the situation," said James Galvin, president of Occidental's agricultural products group. "Hell, I think they're just looking for a subsidy."
In an official statement, Occidental said it is "incredible" that some U.S. producers should object to its Soviet imports. The company said the Soviet ammonia is being sold in the United States at competitive prices.
It denied the imports pose a threat to U.S. national security, calling such assertions "frivolous."