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,-\

MARYLAND
STATE PLANNING COMMISSION
tfi^^

Jn Q mH
p

m
)

THE

FERTILIZER INDVSTRY
L

LIBRARY COLLEGE PARK

STATE OF MAEYLAND

STATE PLANTTIMG COIl'ISSION

Joseph I France William L. Galvin Nathan L. Smith Helena Stauffer Abel "/olman, Chairman
Tho.-nas F.

Hubbard, Executive Director

Report on

FERTILIZER

IIvTOUSTRY

by
Imberman Research Assistant
A. A.

Published throurh the cooperation of the Works Progress Administration

January, 1938.

Digitized by the Internet Archive

'f^:^t)!t3

with funding from

Lyrasis

Members and Sloan Foundation

http://www.archive.org/details/reportonfertiliz17mary

INTRODUCTORY STaTEI;S1OT
The Maryland Stats Planning Commission presents herewith the second of
a aeries of reports dealing with the vital industries of Baltimore and Maryland.

The danger of unemployment, with a stranded or declining population, be-

comes perhaps the controlling factor in the promulgation of plans for the area concerned.

The City of Baltimore is the center of most of the manufacturing in the

State of Maryland and the influence of the purchasing power of its population extend
over the major part of the state.

The vital industries of Baltimore are of

significance to the state.

Through the cooperation of the National Resources Goramittee,

Imberman was assigned to the Maryland State Planning Commission
industries of

Llr.

A. A.

to study those

Baltimore which account for seventy per cent of the employment.

The "Men's Clothing Industry" was the subject of the previous indus-

trial report.

That report demonstrated that the clothing industry should enjoy a

most satisfactory future.

This, the second report, dealing with the Fertilizer Industry; indicates

that

1. The leading fertilizer producing state is Maryland, its production usually varying from 13 to 17 per cent of the national fertilizer tonnage.

2, The leading superphosphate producing state is Maryland, its superphosphate production varying from 20 to 35 per cent of the national superphosphate tonnage. As a result of this huge production of superphosphates, which are manufactured all year round, employment in the Maryland fertilizer industry tends on the average to be somewhat less seasonal than elsewhere.

In every category of fertilizer material produced, Maryland pro3 duction, when compared with the United States production, shov/ed a smaller decline during the depression and a more rapid recovery from the depression than the national fertilizer industry did.

Of all the important fertilizer producing states, Maryland paid the vir.ge per employee in the industry. In the entire United States, Maryland vn'.s second only to California, which is u minor fertilizer producing state in the North, liast, or South.
4.

highrist average annual

5. The fact that the Maryland fertilizer industry pays an average annual 'vige higher th^n that paid by -iny other important producing or competing state, is not due to the high hourly v.-age rates in Maryl/md. The hourly wage rates in Vizryl'md. fertilizer industry are not particularly high. The high average annual

.84871

-11-

wage is due to the fact that the Marylnnd industry produces an unusual amount of superphosphates. Since the production of superphosphate takes place all year round rather th-in only in seasonal peaks, the Maryland fertilizer employee is givon (on the average) somewhat more ste-^dy work than employees elsewhere.
6. The element of direct labor cost in the fertilizer industry is quite small, ranging on the average in Maryland, from about 6 to 7 per cent of the total cost of production. On the other hrmd, raw materials amount to about 66 per cent of the cost of production. It is evident, therefore, that labor cost is a very sm-ll competitive factor. 7. Maryland is one of tha fe states in the low cost producing area. In fact, the cost of production of fertilizer in Maryl-.nd is, on the average, probably among the very lo-ivest.

8. The trend over the past few years towards the production of more highly concentr^^ted fertilizers cai:not but have a very favorable effect upon the Maryland industry since the industry here produces such huge liiaounts of superphosphates. However, the sole drawback is the feet that the price of superphosphates has not fallen quite enough to be in line with nitrogen producing materials and potash the other important plant foods. Comparative price inelasticity on the part of superphosphates has somewhat retarded the use of superphosphates. The use of superphosphates has not increased while the use of other plant foods has. The obvious difficulty was the failure of superphosphates to decrease sufficiently in price during the depression. At the present moment, with agricultural "prosperity" more or less here, and other plant foods rising in price, the inelasticity of superphosphates prices will probably not be of any importance if the prices remain constant. The next dip in the business cycle, however, might affect the superphosph-te producer if the same compar :tive rigidity of prices maintained,

9. The trend towards more highly concentrated fertilizers may put a stop to the practice of some Maryland fertilizer producers of buying up dry mix plants throughout the south and closing their Maryland dry mix plants. Since more highly concentrated fertilizer cont'-ins loss filler than the ordinary variety of fertilizer, less freight and hauling charges are v-;;sted on such filler when highly concentrated fertilizer is shipped. With less freight charges to be spent on valueless filler, the necessity th::t dry mix plants be adjacent to their consumers will no longer hold or will certainly be far less pressing.

10. Finally, the trend toward more concentrated fertilizers will enable the Maryland producers to maintain their competitive position to even a greater advantage than heretofore, since the competition is in the cost of producing the plant food rhich enters into the fertilizer. With more plant food utilized in each ton of fertilizer, the Maryl ;nd producers should be tiblo to v.idun their competitive a4vant:.ge on low cost production.
AcknoT'ledgmeni;

must be made of the cooperation of the Works Progress

V.'.r.A.

Administration which, through

Projuct 7030, has provided the staff used

a.nd

in the tabulition of data, preparation of charts,

publication of this report.

Abel Wolman, Chairm;~,n Maryland State Planning Commission

-111-

AGKNO\VLEDGMEiJTS

Acknoi?ledgHi'eitts

must be made to Miss M. V. Dunne, Chief Statistician

of the Maryland Commissioner of Labor and Statistics, for aid in providing data;
to
Ivlr.

LcVcrne Deals, Chiaf Statistician for i/>mufactures. Bureau of Census, for

statistical material; to various fertiliser manufacturers for individual advice

and information; and ospecially to
Llr.

Al. F. O'Donnell of the National Recovery

Administration vrhose invaluable report "The Fertilizer Industry Under the NRA"
has been a source of vary important data and insight into the problems of the

industry.

Special thanks are due the Women's and Professional Division of the

Works Progress Administration in Maryland for its kind and efficient cooperation
in furnishing, through W.P.A. Project 7030,

the staff which helped to complete

this report.
^i
2-1*

IV-

TABLE OF CONTEIsTTS

Page
CIL\PT3R I

Early History of the Industry

'1

CIL-iPTSR

II

Survey of the Fertilizer Industry

10-27

CJLiPTER III

Causes of Problems of the Industry

28-45

CILIPTER IV
Ra^v

Materials

46-58

CILiPTER

Production, Labor and Costs

,59-81

ORVPTER VI Plant Food Ti-ends and Maryland

82-92

CIL^TER VII Conclusions

93-98

-V-

LIST OF EXHIBITS

Page
Exhibit 1 Movement of Raw Materials to Finished Products
16

Exhibit 2 National Distribution.

-.

21

Exhibit 3 Farm Income and Fertilizer Prices

30

Exhibit 4 V/age Earners

65

Exhibit 5 Average Annual Wage Per Vfege Earner

68

Exhibit 6

Rate Per Man Hour.

....*...-
*

75

Exhibit 7 Employment Indices for United States and Maryland

95

Exhibit 8 Wages Indices for United States and Maryland

96

-1-

Cli.iP7ZR I

!C,U^LY

KIS?Ot;Y 0? TJ.E

Ii-i"DU3Tirr

-2CiL\PT:3^ I

mRLY HISTORY

OF

TliE

INDUSTRY(*)

Census Definition
"the ThG Census of Manufactures clissif ication, "Fertilizer," covers

complete manuf-cture of cornmercial fertilizer of which the principal cl^.sses ^re

fertilizers (mixtures of superphosphates, potash and amraoniates) and superphosphates.

materials for use It does not include the merchandising of fertilizer

in their natural states, nor of tankage from slaughtering and meatpacking

estahlislments." Sulphuric acid produced by fertilizer establishments is included in Census data.

Importance of the Industry

Since the use of fertilizer affects the production of billions of
dollars vrorth of crops, the fertilizer industry is a "key" industry, important
far beyond the dollar value of its products.

A survey by the Nrtional Fertilizer

Association on fertilizer practices among 48,000 farmers in thirty-five states

of the Uiiited States indie. ted that each dollar spent for fertilizer by these

farmers resulted in an average increase of $3.50 in the value of crops on which

the fertilizer
^^as

used.

Fertilizer is highly essential in the program for more

iae:\ns

effective land utilization, and as a

certain cgricultur-3l crops.

of reducing thu cost of production of

Why Fertilizer is Used

The application of plant food or fertilizer

is necopgary because

the soil which are xro'^ing crops consume certoin chemicr;l elements contained in
n-.c^ssary for pl-nt gro- th.

this It is thj fu-Lction of fertilizer to replace

elements in the soil doplotioi: or to make up for original deficiencies of these

("T'Follo-vinp': "Dovalopment'oTTro duct ion of Lupcjrphosphate Convention by K. D.'jaccb and '.. A. Shelton; ?ro';eediags of the bixt h .uinaul
!.:,tional

in the United States,

,

^rtilizc^r A^-nociation,

l?2'.?-.,0.

by providing them in such form that the plants can readily assimilate them.
Also, coiiimercial fertilizer is most profitably used as a supplement to, rather

than a substitute for, other means of soil improvement.

It is known that manure and all kinds of vegetable refuse, when applied

to the soil, undergo chemical changes and in this way return to the soil the" plant

food which the growing crop has extracted as well as certain elements ?;hich the
crop has taken from the air.

By adding larger amounts of plant food than have

been removed, it has been found that larger crops yields may be obtained.
The three main elements contained in commercial fertilizer materials
are each important to a grov/ing plant for different reasons.

Nitrogen produces

rapid development of the leaf

^and

other vegetative parts of the plant and

hastens the blooming period of such crops as cotton.

P hosphoric Acid stimulates

early root growth and is therefor useful in promoting the early maturity of
crops.
It also stimulates the grovjth of fruits and seeds as compared with mere

vegetative growth.

Potash stimulates the formation of starch, gives stiffness

and rigidity to the stem or stalk of the plant and aids it in its general

healthful development which promotes disease

resist.ai'.ce.

Early Imports of Guano In^o The United States

Prior to ld40 the domestic fertilizer industry was confined principally
to local trading in such materials as manure, v/ood ashes, marl, bones, and gypsum,

the last

tv/o

materials naraed usually being ground before application to the soil.

V.'ri^^ht^^

According to C-irroll D.

"previous to 1841 the principal commercial ferti

lizer was bone dust, that being the only form of phosphate of lime then known."
It seems that guano was first used as a fertilizer in the United Spates

about 1824,

'-.hen

I/j-.

John Stowart Skinner, then editor of The

yuo.e:i-ican

Farmer,

received
(1}

tv?o

barrels of it at B'.ltiuore and distributed it in small parcels for

T he Phosph ate Iridustry_qf_thcjjfu tud_Str.;^e3_, sixth special Report of the

U. S. Commissioner of Labr, p. 13 (lb93).

-43Kperiniental piirposes.^
-'-)

No further attempts v;ere made to introduce tnis

material, except that a

fevj

samples 'ere sent home by travelers in Peru,

vverc

until 1340,

"v.'hen

tT.-enty

barrels

shipped here from England.

According to
;'

Wright (2) the first direct shipments rere received in 1841 from the Chincha
Islands of Peru.

The term "guano" hss been frequently applied rather indiscriminately not only to the highly nitrogenous natural guanos, such as those found in Peru

and other countries, but also to fish products, to mixed fertilizers containing

phosphates derived from various sources, and to leached non-nitrogenous natural

phosphates derivc^d originally from bird guano itself.

The early imports clas-

sified as "guano" doubtless included not only the highly nitrogenous guanos,
'.vhich '^^eru

usually applied iirectly to the soil wdthout manipulation, but the

-j.s

non-nitrogenous gu nos, such

those from Mexico, Sombrero and llavassa, some

of '^hich -rare used in the manufacture of superphosphate.

The imports of guano in 1848 were only 1,013 tons, but in the following year ?.1,243 tons
-.Tere

brought in, and the imports then increased rather

The imports of

r^.pidly and reached a maximum of 175,849 tons as ea.rly as 1854.

guano decreased sharply in 1856, but they continued to be considerable until

1861 and became larger in 1866.

Guano was imported principally from Peru and

I'est

other South Ar.eric

>n

countries and from Mexico and the

only
l-.-rgo

Indies.

This

material and bones

v/ere the

sources of phosphate used for fertilizer

in this cotmtry prior to 1868,

v.'hen

active exploitation of the South Carolina

phosphate rock deposits

v.'ns

be.3un.

Beginning Of The Chemical Fertilizer Industry

In 1840 Liebig, in Germany, first advocated the use of sulphuric acid
for the trsotraent of bones to convert their phosphoric ucid into a soluble form
(1) "Guano: Its History, CaurcGs, Qualities and Applic-^tion, " U. S. Commissioner of p.-.tanta: Report on A.'pricul turo fo r the Year 185 4, pp. 90-102. (2) Op. cit.

-5-

which could be easily assirailated by plants.

in
E'i,-;land

In 1B42 a patent was granted

to J, 3. Liwes for the aunufacture of superphosphate by decomposing

apatite, phosphorite, and other phosphatic materials with sulphuric acid.

first scientifically planned fertilizer in Germany^
"'^

Tue

are said to have been

erected in 1850.,
The domestic chemical fertilizer industry seems to have had its

beginning about 1850.

Tho two foll.-T'ing paragraphs on the subject are taken

V;.

from Munroe and Chatard,^^' who quote from a letter written by Dr. R.
Rasin, of Baltimore*.

L.

"The nenufacture of chemical fertilizers in the United States began about 1850. Iii that year, Dr. P. S. Chappell and Mr. V/illiam Davison, of Baltimore, made some fertilizer in an e:iperimental v;ay. About the same time Professor Mapes of Kaw York was experimenting. Later, DeBurg of lie^i York utilised the spent bone black derived from the sugar refineries and made quite In 1853 or 1054 a quanity of 'dissolved Bone Black' (superphosphate), P. S. Chappell commenced the manufacture of fertilizer, as did B. M. Rhodes, both of Baltimore. In 1855 Mr. John Kettlewell recognizing the fact that Peruvian Guano, then becoming quite popular and containing at that time 18 to 21 per cent of ai.iionia, was too stimulating and deficient in plant food (phosphates), conceived the idea of manipulating the Mexican guano containing no ar.imonia but 50 to 60 per cent of (bone) phosphate of lime, and called his preparalJlon 'ilettlewell's manipulated guano.'
"TTiile in 1856 the sales of Peruvian guano had increased to 50,000 tons and of Mexican guano to some 10,000 tons, there v;as not at that date 20,000 tons of artificial fertilizers manufactured in the entire country. Baltimore was not only the pioneer but the principal market for fertilizers until some time after the Civil War.- The 50,000 tons of Peruvian guano referred to was bought and sold in this market, and there was little demand for th-t or the Mexican guuno in any other market unless the inspection brand of the guuno inspector of Baltimore was upon the. p. .ck,.gc;. The Peruvian Governni-3nt agent, who received and disposed of all importations, was located here, and all other m?:rkets were supplied from Baltimore. At that time no fertilizers ".ere sold west of Feniisylv ania."

The following paragraphs, relating to the pliosphate fertilizer industry

prior to 1858, are quoted from

;,

paper by R.

V..

L. Rasin:

^''^^

"The isL'-inds of Aves, Brotiiors, MonKs, Roncador, Pedro Keys, Sombrero, Nov:;8sa and othiir.s for a time supplied the dem-;iids of the Du:nipulc;tor and raanu"actiar-r of sup.^r^il0Sl-J.at^JS .in t u. i,.iitOd Stat .,!a, -a,:d lajr'.>_ .fiUautities were shipped to TSurope.
(1) "Chemicals," G. 3. Munroe and T. M. Chatard; U;.ll>jd Statu.s Ounsus, 1900, Vol. 10, Manufactures, Part 4, p. 562. (2) Loc. cit. {'i) "Growth of the Fertilizfjr Industry^" .toerican Fertilizer, i, 5-8 (1894)

"In the latter countx-y the coprolites from Canbridge and Suffolk were also extensively used, Sir J, B. La^ves being the pioneer manufacturer of manures in England, 77hile in this country Profs. Miiptjs and DeBui'g, of IJew York; Dx-. P. S. Chappell, John Kettlewell, B. M. Rhodes and v.iiliam Davison, of Baltimore, vvere the first to undertake the manipulation and making of superphosphates, profs. MiiyBs and jeBurg utilizing the refuse bone or spent bone black that had accumulated at 'the sugar refineries and was sold for about $1 per hogshead in many cases given 'uvay.

":Dr, Chappell and Mr. Rhodes used refuse from tiie S';jne source, and that from button m^^kers, -md later from importations of phosphates from the YJ3st Indies, rnilst the firm of John Kettleiyell & Co. (and his partner John S. Reese) confined themselves to the manipulation of Peruvian and Mexican guanos,

"The dissolved or superphosphates were so much superior to the crude phosphates heretofore used that tiiey very soon superseded them, when the Civil War broke out and for a time checked the progress of the business that at that time, like other manufacturing interests, looked to the South for purchasers of their products, and d\iring the continuance of the v;ar but little was done in
the trade.
"Peace, however, induced ne\: activity, and works were started in Baltimore, Richmond and one in Charleston, relying solely upon the West lauies deposits for their supply of phosphates, and until the discovery of phosphates in South Carolina in 1867, the above-named were the only sources of supply."
V'ith the

opening up of the South Carolina deposits Charleston soon

(-'-)

became an important superphosphate manufacturing center,

seven companies

being engaged in the industry in South Carolina in 1870.

Very little information seems to be available in regard to the
quantities of superphosphate manufactured in this country prior to 1899, and
no method
h: s

been found of estimating the production from the quantities of

phoophatic materials used in the industry during the years prior to 1868.

According to the ^unorican Fertilizer Handbook'

''ire

'

a few tons of "tiuperphosphate

sold in

Mev.

England in 1852;

md

in 1854 several hundred tons of mixed

fertilizers were manuf-ictured along the Atlantic Seaboard, principally in

B'lltimore and Ch rleston, but also in Richmond."
f'.rticle

It is ustim-;ted in this

th t 50,000 tons of mixed fertilizers were made in 1868.

Munroe and

Ch.?t-.rd(3)

quote Rasin to the effect that up to 1856 less than 20,000 tons of
,

r:o uth C-.ro lin-i, and Canarlian J^hosplia tes, by C. C. H. Miller, p-lV4, (1) :-'lori-lLondon, l89Si. (2) For 19rj7, p. D-9. (S) Op. cit.

;"

','

-7-

artificial fertilizers

vieie manufa.^tiired in the

entire country..

Jackson, (^)

rriting in

1854,. saysl

"Concentrated fertilizers, such as guano, superphosphate of lime, and sulphate of ammonia are now extensively used, especially by Southern planters, \,ho, not keeping their cattle in stalls,, have no barnyard dung."
"fertilizers" appears as a special item for the first time in the
Census report for 1359, but superphosphate is not listed as a separate item

until

1699-.

Assur.iing

average value of o28 per ton for 1859 and $38 for 1869,
';7as

the production of fertilizers in those years

;..l,,a34

tons and 153,029 tons,

respectively.

According to the Census fig:J"es the tonnage of superphosphate

ai'.iounted

produced in 1899
produced,

to approximately 50 per cent of the total fertilizer

^issuiaing that this ratio

/as

holds for the census years prior

"co

1899

the production of superphosphate

approximately as follows

1859, 16,000

tons; 1359, 77,000 tons; 1379, 364,.000 tons and 1889,. 949,000 tons

1870

most of

rhieh

v.'as

manufactured in Baltimore.
Vfa<-;g3man, ;agner

and Gnrdin.er^'^) state that as early

.is

Kolr.ies^'^^

reconi".iended

finely ground South Carolina phosphate rock for direct application

to the soil, and several of the phosphate mining companies then operating near

Charleston advertised the material for sale.

Early adverse reports on the

agricultural value of raw rock phosphate, coupled with the rapid establishraent
of plants for the manufacture of the mure soluble and more quickly acting

superphosphate, led to the practical cessation of use of this material in the

South until the discovery of the Florida hard-rock phosphate field in 1889,
'hen

a considerable tonnage of soft phosphate was mined and used directly as a

fertilizer,
U. S. Conraissionars of P.^tent: H'.,port on .tgriculture for the year 1854, pp. XU2-108, "Homarks on Fertiliz'ers.'lDf SHllntTl/I^nures" "Fy"c, T. Jaclcson. Anc-lysis of J'Tperimental Work with Croui id h tr7_ i<oci^ r_hp phate as a Ferti lizer ( 2 U. S. D^iportr-ent of ^f:riculture. Bull. 699," p. 2 (1918")" (o) Tho PUosph'it e hoc kn of South C:..rolin^, pp. 45-46 (1070)
(1)

-8-

Grinding of Tennessee phosphate rock for direct applic.'ition to the

soil
'.vas

begim about 1897.

The figures for

th...t

year, comprise 2,500 tons of

Florida soft phosphate and 3,000 tons (estimated) of Tcnessee phosphate. figures for 1898 to 1913, inclusive, are estimated from the sales of the

The

oldest and largest company producing ground Tennessee phosphate rock for direct
a.pplication.

Mineral Resources of the United States does not report any pro-

duction of Florida soft phosphate during this p-^riod, and most of the phosphate

rock used for direct application

v;as

obtained from the T'^nnessee deposits.

It IS estimated that during the period 1869 to 1889 the quantity of

phosphate rock used for direct application varied irregularly from 100 tons to
500 tons annually.

From 1390 to 1898 the annual consumption of phosphate rock

for this purpose varied irregularly from 400 tons to 1:j,675 tons, the increase

over former years being due largely to the production of soft phosphate in

Florida.

Tue quantity of phosphate rock used annually for direct application

gradually increased from 7,500 long tons in 1399 to 79,189 long tuns in 1919,
then decreased to 72,301 tons in 1920 and finally to only 10,548 tons in 1923,
3i;ice 1923 the

quantity gradually increased to 50,000 tons in 1929, but has

fallen off to 33,357 long tons in 1935*

In the manufacture of superphosphate as now practiced in this country

an average approximately one part of phosphate reck is treated with 0.91 part
of sulphuric acid, vhich
;

ould produce 1.91 parts of superphosphate, if no

iiraounts to

shrinkage occurad.

The shrinkage, .ho'ever,

v.-hich

an average of appruxi-

matsly 10 per c:nt,

:bout 1.719

means that

e;ich

part of phosphate rock produces

^

p.rts jf finished superphosphate.

')

ns a result the single factor

1.0r;53 is used tu convert long tons jf phosphate ruck into short tons of fin-

ished superphosphate.
(1)

Tha teiTn "finishfid" superphosphate applies to the cui-ed material v'hich has not been i.-,ixed v:ith filler or ground limestone jt othor conditioners.

-9-

Us3 of B.:nes In The Munuf.-icture of Sup'3rphospli;:te

Although superphosphate

vvas

first manufact\ired in this country

from bones and waste bone products, these naterials were largely supplanted
at an early date in the Eastern and Southern States by the cheaper lovj-nitrogen,

high-phosphoraa ^uanos

frora the

oot Inuieu, and especially by the i.iineral

phosphates, T;hiGh attained a dominant position after the discovery of the South

Carolina deposits.
x.'Iiddls

Plentiful supplies of bone

v/ere

available, liowever, in the

T'cstern States which were not favorably situated with respect to the
rainer-il
vivr;

known deposits of

phosphates.

In these States bones continued to be

one of the principal

m;\terials for the manufacture of superphosphate,

i.7hen

probably until about 1896,

rock phosphate deposits
T;as

the active exploitation of the Tennessee brown-

begun.

During this period, hovjever, the production

of superphosph-tG in th3 iliddle l;estern States was small in como irison with that in the South and E .si.
jilthough tho quantity of bone products used by the fertilizer industry

increased from 96,679 tons in 1699 to 169,

the manufacture of superphosphate
h;is

'^Vl

tons in 1919, the quantity used in

progressively decre'ised.

At present only

a few fertilizer plants inake superphosphate from bones and thesij only on special

order.

Bones for use as fertilizer comaand a higher price per unit of phosphoric

acid in the form of bone m^jal than in the form of superphosphate, because of the

relatively

lor/

price of superphosphate made from mineral phosphates.

m
-,.'1

In general, the quantities of j/hosphotc rock apparently used annually long th. manufacture of superphosphate increased steadil;.- from about 16, 000 /tons
ip.

in l(jo8 to obout 2,197,000 long tons

1917.

Ov/ing to fluctuations in business

agricultural conditions the quantities of rock used annually for this pur-

pose since 1917 havo vnrifid irrogul:.rly from some 1,227,000 tons in 1921 to

3,215,536 long tons in 1935.

-10-

CaiPTER II

SURVEY OF THE FERTILIZER INDUSTRY

-11CILiPTJCh II

SURYTf OF

TllS

FEiiTILIZER li^DUSTKY

?ertiliz3r Materials
There are tliree essential eleraents entering into the composition of
commercial fertilizer. (1) Kit ro.jen
,

the chief sources of v.hich are nitrate of

In the

soda and sulphate of amraoaia, as veil as certain orL,anic iviaterials.

fertilizer industry, nitrate of soda is classed as a nitrate r.hile the other

nitrogenous materials whether inorganic (i.e., mineral), or organic (i.e., derived from animal
ir

vegetable matter), are classed as ammoniates, since they

are supposed to give up their nitrogen in the form of ammonia vlien mixed with
the soil.
(2)

Phosphates

the principal source of 'liich is knov:n corm.iercially

as acid phosphate or superphosphate, the chief carrier of phosphoric acid.

(3)

Potass ium, kn n-n to the general trade as potassium salts, or potash.

Mixed fertilizer is prepared according to different formulae made up

;f

these three elements, in varying proportions,

jilns

filler.

The different

T7ell-knjv.'n bre.nds

on the market are kno^ n by the formulae in uhich these exact

proportions are expressed.

For example,

in making

uj3

the popular grade of

fertilizer knorn to the trade as 3-8-3, the mixture v'ould coxitain 3 per cent of

nitrogen

litrates or ammoniates), 8 per cent of phosphates (acid phosphate),

and 3 per cent of potash.

Nitrogen
The chief sources of nitrogen used in the manui'acture of fertilizer
are nitrate of
s'>da,

cyanamide, nitrate of lime, and suljjhate of ammonia, these

Ai.ioug

being the principal inorganic nitr igeuous materials.

the organic materials,

and abattoir tankage -v.-hich

Thich are largely domestic, are c.'ttonseed meal, dry bio

'd

by-oroducts of packini? and rendering establishments, and fish scrap,

frjin

comes

fish scrap factories and fish canneries al Uig

tlie

Atlantic coast.

-12-

Nitrate of soda is produced in Chile by refining a mineral knonn as

caliche.
The only
knoT?;n

natural deposits in the

orld that have any commercial

value, are situated in the arid regions of northern Chile.

Such low grade

deposits of nitrate as have been found elserhere in both North and South America
are negligible so far as being utilized for commercial purposes.
The most important organic amnioniate used for fertilizer is cottonseed

meal, a by-product resulting from the extraction of oil from cottonseed.

It is

especially suitable for crops such as cotton and tobacco.

Because of its protein

content, cottonseed meal, in many sections, is also valuable as a stock feed.

A nimber of animal

a:.imoni-ites

used for fertilizer purposes are produced

by slaughtering establishments from their waste products; also by rendering establishments from dead
anira:ils

and meat scraps.

Of these, dried blood and tankage

are the most import. mt.

Phosphates
The principal phosphates used for fertilizer are acid phosphate, basic
sl'.g,

end various bond products.

Ph;)L>phr.te

rock and acid phosphate are entirely

Tv'iiile

domestic ;roducts and are produced directly for fertilizer purposes,

basic

slag is

b^r-product of the basic Bessemer steel process.

Bones used for

fertilizer are obtained from by-products of the slaughtering and rendering

industries, both domestic and foreign.
Of these various materials containing

phosphoric acid, acid phosphate is by far the most important and forms the basis
of most of the connercial fertilizers on the market.
The term acid phosphate is

used to designate
r'ith

product derived from ground rock phosphate by treating it

sulphuric acid.

There are various grades of acid phosphate manufactured,

but the bulk of the output contains from 16 per cent to 18 per cent ;ivailable

phosphoric ucid, and is coranouly designated as superphosphate.

Another typu of j;hosphate is the double superphosphate, referred to as

"treble" or "triplw" superphosphate. This product contains about
E-g-

to

'5

times

-13as much :^.vailable phosphoric -icid as the ordinary superphosphate.

The two

grades of superphosphate are used for the same purpose.

is less bulky and is more economical to transport.

The "treble" grade

The production of super-

phosphate is concentrated in the South Atlantic States, notably Maryland and

Georgia,

Phosphate rock

nov;

furnishes the principal sources of phosphorus in

fertilizers, not only ia the United States but also in the European countries.

Most of the rock mined in the United States cories from Florida and Tennessee.

Extensive deposits of high-grade phosphates have been discovered in several

other States vhich as yet have scarcely been touched.
The United S'.ates mines

not only rll of the ohosphate rock used for domestic consumption, but also

exports considerable quantities

to.

European countries.

Potassium
Potassiuivj, or potash, is one of the most

important of the materials

used in fertilizer.

It is generally knovrn that German potash salts is the

chief source of this material.

paiaies producinj^ any potash.

At present there are but t^iree American com-

One of these companies is located in Baltimore,

and the potash produced by this latter company is taken from distillery ?/aste,
that is, the potash is a by-product of the crude molasses used in alcohol fer-

mentation.

JiS

a result the output is very limited.

Industry Financially

li

^erested In Phosphate Manufacture

ThG fertilizer manufacturers have a more direct financial interest in

phosphate products than in either nitrogen or potash materials.

With regard to

the nitrof^en and potash materials, thu A.-erican r.ianufacturer of fertilizer is

es8onti.:.ily a distributor buying and selling them, largely as radjunots
;lo

t,he

phosphate products v/hich he is actually

T-)bIe 1 not
ill

m.

.nufacturing.

As \.ill bo evident in
indu.';try

fertilizer mixers rrvanufacture superphosphate but the

-14T.LBLE 1

LOGATIOIJ OF FERTILIZER PLiilOTS

1953

1954

1935
".'"otal

A
Alabama Arizona Arkansas California Colorado Connecticut
Delar/are

B
9 2

Total
55 13 28 1
9

B
6

A
6

B
8
2

Total
41
2 9

8
1 4

70

8
2

39
2
9

53
2

55
2

16 33
1
9

1 5

51 1
9
8..

1
5
3

Florida Georgia Illinois Indiana

IOT7a

4 17
2

8 35

20 4
7

120
5

1
1 4
6 2 2

Kansas Kentucky Louisiana Maine Maryland Massachusetts Michigan Minnesota Mississippi Missouri Montana Nebraska Neu Jersey Ne- Mexico Neyr York N. Carolina Ohio
Oklahoiaa

8 2 4
6

8 40 157 11 15 3 4
9

17
2

18
5
7

38 124
8 8 4
5
6

12 55 1 10 8 46 159 15 15
5 5
9

12
61

57 1

1
9

1
5

17
2

18
5
7

8 8 48 148
9

8 56

1 1 5
6
2

1
1 5
6
p

11 4
5
7

183 16 18
5

2 5

12 35
7

1
1

15 12 46 10
6

1
5 1 1

14 36
6

14 14
47
9

1
5
1 1

8 15 38
6

10 14 15 49
9
7

4 5
7
7

4
1

15 8
1 3

4
1

4
1

5 9

5 5

1 3

5
6

17
5

4
3

10 3
5

18
3 1 3

1
3 2 1
1 2 7

1 3

1
2 1 2
7

18
11 65
.10

21

2 1 10
6

1
2
7

12
7

14 84
27 1 1 43 1 64

10

11

19 1 15 72 11
1 3

22
1

23
1

26
1

18
89 28 1 3 37
1

1 10
6

15
73 11
1

11

1 5

Oregon

Pennsylvmia

1 38
1

2 5 5

33
1

2 5 5

3 32
1

19 90 28 1 3 36
1

Rhode Island S. Carolina 10 6 Tennessee 5 5 Texas 2 1 Vermont Virginio 7 3 Washington West Virginia Wisconsin 1 Totals Tfi>r 101

43 4 24
1

10
5

53
5

14
27 1 48
6

3
7

19
1 5

33
6 2
6
'

56

68 15 22 1 46

10
5 3
7

74
3

89 13

15
1
1
6

15
1
7

21 1 40 14
1 5

24 1
50 14
1 5

2
7
'

655

o58

101

97
-

692

890

_100_ 96

772

968

Complete Plants, make Sulphui'ic Acid und Gupo-rphosphate. B - Purchase Sulphuric Acid and make
Guperphosph'ite
C -

Source

Anericrin Fertilizer H'indbooka.

Purchase Superphosph^.te and mix Fertilizer materials only.

-15as a whole has the bulk of its capital invested in nianufactirring phosphate

products.

Fertilizer Plants

Fertilizer plants are divided into three categories by the

Fertilizer Handbook:
Group A

Ariierican

Complete fe rtil izer producers r^ho mcinufacture sulphuric acid, use it for 'icidulating phosphate rock in the production of superphosphate, vmicji in turn is mixed viith varying proportions of materials thot supply nitrogen and potash.

Group B
Su.jer-jjhosphate producers
T^jho

purchase sulphuric

icid but manufacture their own superphosphate and mixed fertilizer in the s;inie manner as thoso in Group A.

Group
Dry mixers who purchase only finished materials, including superphosphate, but produce mixed fertilizer in the same manner as those in Groups A and B. I'h'./y do not mxmufacture either sulphuric acid or superphosphate.

There are 196 plants in the United St tes nhich iianuf -ictured superphospb'jte in 1935.

Of these, 100 were in group a, which

and 96
^-^ere

ra...nuf actured

its required
.cid.
C,

sulphuric
rom.:-.ining

-cid,

in group B, which purchased its sulphuric

The

plants engaged in mixing fertilizer in the United States, group

:7hich consisted of 772 pi

3.
Th'j

mts, purchased thair superphosphate from groups

A.

and

purch-;se of superphosphate by group C represented about 60 per cent'-'-'

of the aimual production of this fertilizer in^jredient.

Exhibit 1 illustrates the movement of raw materials to the finished

rro^uot in the fertilizer industry.
(1)

"Crude Puosphates and Superphos~ph~ate," U>S~ Tariff Commission, Report i;o.l00,

1935, p. 11.

16

z:
I/O

L4J141

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zrs:

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CX^OJ
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<)'*

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-?

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of ai

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u. rV >ex ^ Q^

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Uli

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ji
1

ex ~>

I 2

-17-

Manufacture of Superphosphate
The follov;ing description gives an idea of the raanufacture of super-

phosphate and mixed fertilizer in a tjrpical plant;

The phosphate rock is

received at the fertilizer plant in carload lots and by various raechanical

methods is transferred to a grinder v/here these rocks are broken up into small
particles
bloT?s that
r.lien

the rocks are ground they are carried to an air separator which

portion r;hich has been ground fine enough into an elevator for conThe rock which needs further

veyance to a storage bin at the top of the plant.

grinding is returned to a grinder.

Sulphuric acid is brought into the plunt in carload lots and stored in
tanks aT7ay from the ulant,
V/hen the acid is

needed it is pumped to an open tank

in the top of the fertilizer mill vhere it is diluted with the proper amount

of ?ater.

The ground phosphate rock and sulphuric acid are then put into a mixer
in about equal proportions by v;eight.

This mixer is a large covered vat in

which revolving paddles thoroughly mix the acid and phosphate until the m.ixture
becomes a gummy mass.
The gas generated is drarn off and Y'hen the chemical re-

action betv7een the sulphuric acid and the phosphate has proceeded to a satisfactory point, the mixwr operator discharges the material into a storage' bin beneath the machine.

Normally the mixtui-e is allowed to set over night.

This

process generates considerable heat and the walls of the storage bin are usually
thick concrete.

The engineering and mechf:nic:jl problems concerned

of superphosphate have received much attention.

v;ith the

manufacture

Mass production involving the

hcjidling of large qu.--ntities of solid materials with the least m

mual labor

have stimulated the installation of various mechanical devices for discharging

the superphosphate from the dens.
Soiae

superphosphate plants discharge the dens

-la-

by means of electric or gasoline shovels; some utilize overhead traveling

cranes and others have so-called mechanical dens and excavators.

Mechanical dens offer the advantage of practically continuous operation

vfith a

minimum amount of attention and manual labor and are economical of space
m.-.n;'"

which is an important item in

fertilizer plants.

Although, in general,

there is considerable room for improvement in the mechanical equipment many

older superphosphate plants and many of the nerer plants are carefully designed
and equipped rrith efficient labor saving machinery.
In order to insure a satisfact.;ry mechanical condition and a maximum

conversion to available phosphoric acid, superphusi^hate should remain on the

aging pile for at least a month but its storage requires a large space and the
time consumed is of importance in many plants.

These aging piles are usually

on the bare ground underneath a shed.

stored.

Ot;er fertilizer

materials are similarly

Process of Mixing Raw Materials to M-.ke Mixed Fertilizer

In the larger plants mechanical methods are utilized to transport

smaller qu.mtities of the various feitilizer materials into different storage

bins cbove the mixer which is practiciilly on the floor level and when ready to

make a particular type of fertilizer the mixer operator releases the proper
amount of each material into the mixer,
Vihen

thoroughly mixed the finished

fertilizer is poured into sacks hung underneath the mixer by means of a lever operated by hand.
The sacr^s are then sevm either by hand or by machine and are moved

by means of hand or electric trucks either to the freight cars or storage

warehouses.

A preliminary mixing of base goods often takes place about four

months before the shipping season.
The preparation of most finished mixtures

-19does not take place

e:;otj:

just prior to its shipment so that very little

bagged fertilizer is kept in stock.

_,ocation of the Superphosphate Industry

The trend toward concentrated fertilizer is of especial interest to

the producers of phosphate products.

The industry as

nov,-

situated is in

large measiire sot up on the basis of producing a superphosphate T/hich contains

froci 16 to 18

per cent of available phosphoric acid.

This has meant that the

manufacture of superphosphate has always been a more or less localized industry

because it is usually more econonical to ship phosphate rock containing from
30 to 54 per cent of phosphoric acid than to ship superphosphate containing

from 16 to 18 per cent.

Thus the plants have been located at strategic points

in the heavy fertilizer-consuming areas Tvhere long rail hauls of the finished

product are not necessary. ^^

Sulphuric
Orio

xi.i:id

hundr^^d fertilizer plants produce sulphuric acid.

The fertilizer

industry consumes approximately 50 per cent of all sulphuric acid manufactured

in the United States.

The fertilizer industry produces about the same rmount

of sulphuric acid as it consujaus but there is some interchange with commercial

acid producers.

Concentrated Superphosph;ites
One of the chief developments in the move toward concentrated
fertiliz-^rs has been the development of so-called double and treble superphos(1)

The reason for the loner pjrcentrige of available phosphoric acid in superphosphate than th.-.t contained in the raw material is due to the fact thit each long ton of phosphate rock is created '=.'ith a short ton of sulphuric acid in order to make the phosphoric acid available as a plant food. The phosphoric acid in the monooalcium phosphate of the resultant product is therefore uf^compunied by a calciiom sulphate (gypsum) v/hich is of questionable value 08 a fertilizer in any such quantities as contained in ordinary Guperphosphute

-20-

phates which are products ctotaining less gypsum per tun and which contain

from

2g-

to 3 times as much available phosphoric

acid^^ as does ordinary

superphosphate.

Tennessee Valley Authority Fertilizer Activities

While the processes of manufacturing the more highly concentrated

superphosphates have been knovm for a nuraber of years, little headway has been

made in actually getting them into use by farmers.

The matter has taken on new

The Tennessee

significance by the activities of the Tennessee Valley ji.uthority.

Vallley Authority has not only put into operation entirely modern plants for the
production of treble superphosphates but has also made arrangements for practical
demonstration of their use under real farm conditions, on a series of cooperating
farms in the counties embraced in the Tennessee Valley Authority project.
Thus

the Tennessee Valley Authority is attacking the problems which have retarded the

spread in the use of concentrated superphosphates, mimely, the question of educa-

ting the farmer both as to the Ji'ficiency and methods of applying the more concentrated fertilizers.

The fertilizer manufactured by the Tennessee Valley Authority has not

boen sold but has been given f.o.b. the factory to these cooperating farms to be

used in developing proper methods of use.

TiG

comraercial manufacturers uf

fertilizer nolcomo such ixperimentation but are opposed to any sale of fertilizer

by the T

;.iiaessee

Valley Authority in competition with private manufacture.

Plant Location

Fertilizer is a heavy material with

lov?

specific value, and high

freight rates have caused the concontration of a large percentage of the

fertilizer plants in the main consuming areas.

{Ij

T .biu 1,

and Chart 1 of Exhibit

Coinmissiun

"Crude Phosphates, and ;juporp)iu3phate," U, S. Ta riff 1935, p. 10.

hoport No. 100.

tXWIDlT

PERTlLIZtR INDV5TR.Y

NATIONAL DDTRIBVTION
1935

CHABT-

LOCATION OF PLANTS

-50VRCE-

AMERICAN FERTILIIER

HAND BOOKi.

CM ART -2PRODVCTION

-50VRCEV.5

BVREAV

OF

THE.

CEMSV^.

CHAIiT

CON5VMPTI0N

-LEQENDPER CENT OF VNITED 5TATES

10*TO?0'/.

6% TO
3'/.

lOV.

TO

6-/.

I"/.

TO

3'/.

LESS THAN
-lOVRCt-

IV.

FERTILIZEP REVIEW

-22-

indicate the distribution of fertilizer plants.'*'

As can quickly be seen from

the Table and the Chart, the concentration of fertilizer plants is found in the

South,

By far the greatest number of plants is found in Georgia, which contains

North Carolina

about one-fifth of all the fertilizer plants in the United States. and South Carolina are next in the number of plants.

Curiously enough, the tonnagt

production of fertilizer does not follow the same order.

Production
The leading fertilizer producing state in the union is Maryland which, according to the latest Census data, produced 934,000 short tons in 1935, or

approximately 15 per cent of the national fertilizer production.

In the history

of the fertilizer industry Maryland has alv/ays been the leading producer in the

country, its production varying anywhere from 13 to 17 per cent of the national

production.
ing states

Table 2 indicates the annual fertilizer production of all the lead.and

the per cent of the national production contributed by each state;

Chart

of Exhibit 2 presents the data graphically.

In order of importance the producing states are as follows:

Maryland,

14.4 per cent of the national production;

9,7 per cent;
r.nd

Georgii'.,

11.3 per cent; North Carolina,

Virginia, 9.2 per cent,

V/ith the

exception of Maryland, the

major producers are in the South, and the reason for the concentration of plants
and fertilizer production in easily expl-.inable
th'jt

area and in states bordering on that area, is

the major fertilizer consumption is found in the South,

Consumption
It has been estimated that 98 per cent of the production of the

fertilizer industry is sold to f-irmers, and 2,239,548 farms reported the purchase
of commercial fertilizer in 1929.

Those farms represent approximately one-third

(1) The nur.iber of plants indicated in Table 1 is greater than the number of

fertilizer establishments given for these states by the Census, The discrepancy is duo to th-j frict that tho Census Bureau limits itself to establishments" pro'lucing at Icist $5,000 worth of products, wliilo the iimerican Fertilizer Handbook deals wjth all plants regardless of size.

-23ID
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-24-

of the farms reporting to the Census.

It must not be assumed from these

figures, however, that the fertilizer industry has tapped only one-third of its

potential market -- not all soils need additional plant food and some lack the

water without which fertilizer is ineffective.

Fertilizer is mainly used along

the Atlantic seaboard and in the South where the plant food content of the soil
is either naturally low or has been depleted by the system of farming.

The Market The great geographic variations in fertilizer consui.iption can be noted
in the following Table.

Table 3 represents a general sumraary of some of these

variations by geographic divisions.

TABLE 3
COMilERClAL FERTILIZER

199

1)

Per Cent of U. S. Crop Acreage

Fertilizer Tons Bought

Farms

Per Cent of Total

Total

Reporting Per Cent All Farms

United States
Divisions Ke?; England Middle Atlantic East North Central West North Central South Atlantic East South Central '.Test South Central Mountain Pacific

100.00

7,636,022

100.00

2,239,546

36.61

1.00 3.94

345,303 798,433
773,057

4,58 10.60

68,318 206,325

54.69 57.70

15.66

10.26
1.41 49.20

518,594
56,419 b08,175

32.96
75.07 76.36

38.39 7.55
6.92

106,332 3,707,305

1,185,827
'i31,885

15,24
5.73 .14 2.34

529,175 219,773 3,824 28,919

49.82 19.92 1,58 11.05

16.05 6.81 3.68

10,272 176,638

crop The South Atlantic States with but 7.5 per cent of the total /acreage of

the United States consumed over 49 per cont of the total tonnage of fertilizer
v.'lth

an averaf'/3 of 264 pounds per crop acre.

]'>i;jt

North Central States vdth

(1)

Baaed on data in p&n::us of ...-TicultMref HMftoonth nonennini Cen.suSj 1930, 'i'lgriculture" - United Otates Dumrriary, Vol. II.

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-Eels. 6 per cent uf the total United States crop acreage consumed only 10 per cent of

the fertilizers rith an average of only 26 pounds per crop acre.

Still more strik-

ing are the figures for the West North Central States which contain 39.3 per cent

of the nation's crop acreage and used only 1,4 per cent of the total 1929 ferti-

lizer tonnage.

While for the United States as a whole 36.61 per cent of the farms reported purchases of fertilizer in 1929, particular States showed the following percentages:

North Carolina, 83.57; Georgia, 84.76; South Carolina, 88; and Alabama,

80.65

Even though the principal use for fertilizers is on cotton, tobacco,

potato and truck crop, it must not be reasoned therefrom that those crops always
lii.iiting

require fertilizers under all conditions.

The/factors ore the soil texture, soil

fertility, and precipitation, or at least the availability of water through irrigation.

There is a considerable difference in the extent to which farmers raising

The

the same crops use fertilizer in different sections of the United States.

average yearly

consuiaption of fertilizer in the United States is given in Table 4,

M,

rket Gepgraphically Concentrated

5,

AS will be seen from Table

given below, about 65 per cent of the

fertilizer pijurchased by farmers in 1935 was bought in eight states.

t:^le 5 in 1955 by eight le/j)ing consuming states^^)
To:.a

per

ceiit

of

.jj. i<"eh7.tlizek consuj/ed

State 1. North Carolina 2. Georgia 5. South Carolina

4,
&,. 6. 7.
'3.

AJ.abama

Yiorida Virginia Ohio Pennsylvania

bou^^t 1,000,000 017,000 614,000 42^,000 418,000 579.000 507,000 275,000

Per. Cent U.S. Total 15.1 9.9 9.9 6.8 6.7 6.1 4,9 4.4
..

Cumulative Per cent 16.1 26.0 55.9 42.7 49.4 55.5 60.4 64.8

Total 3 St-tes
U. S. Total
(1)

4,032,000

64.8
100.0

6,191,000

Fertilizer Hcviey/

-27-

The fertilizer consumption in the United States is geographically

illustrated in Churt 3 of Exhibit 2.

Five states, all Southern, bought approx-

imately half (49,4 per cent) of the total reported in 1935.

A comparison of Taole

and Tuble 4 V7ill soon indicate that the five

states Tfhich consume about 50 per cent of the national fertilizer production -

North Carolina, Georgia, South Carolina, Alabama, and Florida

also have

slightly less than 50 per cent of the nation's fertilizer establishments within
their borders, although these states only produce about 40 per cent of the

national fertilizer tonnage.

The point of real significance is the fact that almost all of the

total tonnage is sold to farmers.

The point is important since it means that

the fertilizer industry is dependent almost exclusively upon one class of

customer.

The income and general purchasing

pov.-er

of these customers are sub-

ject to frequent and violent fluctuations V7hich reflect directly upon the poten-

tial sales of fertilizer.

-28-

CiLJ^TSR III

Causes of pkoblkvIs of tie iwdustry

-29CILiPTSH III

CAUSES OF

PK0BLE1.'IS

0?

TIIS

INDUSTRY

The problems of the fertilizer industry arise largely because of its

Qependeace on the ons consuiaing market

are familiar to
m-^.ny.

the farraer.

The farmer's aifficulties

The major difficulty is the fact that the prices he re-

ceives for his crops are usually insufficient to pui'chase all his necessities,
to allow for replacement of machinery, upkeep of his
faa:'m,

and taxes.

Thare

are

m'-iny

complicited theories for the explanation of these phenomena, but they

need not detain us.

facts.

Exhibit 3 and T.^bles

6,

7,

and 8 present some of the salient

Chart 1 of Exhibit 3 indicates the comparative instability of the wholesale price of Farm Products as contrasted vrith the ^^holesale prices of Fertilizer

Materials, Mixed Fartilizer, and finally Ail Commodities.

Prices of Furm Products

are almost entir3ly dependent upon supply and demand, and in the face of an indus-

trial crisis which undermines the purchasing power of urban consumers, the farmer
is virtually helpless.

Jmd since the fertilizer industry must depend almost en-

tirely upon the farmer, that industry always reflects the precarious position of
the farmer.

Chart

of EAliibit 3 indicates the retail price indices of various

commodities pm- chased by the farmer, contrasted i;ith the prices received by the
farmer for his produce.
In 1932, the prices received by the farmer vero only
r/ere in 1929.

44.5 per cent of

v/hat

they

UotT.'ithstanding that fall, a11 Com-

modities Used in Production by the farmer vere 72.7 per cent of the 1929 price
level.

Fertilizer prices kept dropping, but not quite as much as the index of

All ComiTiodities,

Hovever, v/ith the inauf^urntion of the ^i^-ricultural Adjustment adminis-

tration program the price of the farmer's produce rose, but the price of
Cor^nodities Used in Production rose still faster.
Cur'iously enough,

,JL1

the retail

ii z
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31-

TAELE
T.-IfOLESiiLE

COLMODITY PRICE INDICES

Gompilad by the U. S. Bureau of Labor Statistics

Adjiistod to 1929 = 100

Year

Fertilizer Materials

Mixed Fertilizors

.ai Commodities

Farm Products

1927

104.4
102.7

95.6

100.1

94.7

1928
1929

100.1

101.5
100.0
90.7

95.4

100.0
92.9
815.4

100.0
96.3

IQO.O
84.1
65.5

1930

1931
1932

84.3
71,3 66.3
74.6
72.6

76.6
68,0

72.6
71.5

45.9
48.9
62.2

1933
1934
1935 1936

69.1
78.6

72.8
72.0

84.0

75.1
77.1

71.5

70.3

84.8

-32-

TABLE 7

PRICES RECEI\^D BY FAI^MERS

i\RD

PRICES PAID FOR COMIODITIES BOUGHT

Indexes Compiled by U. S. Bureau of Agricultural Economics

Adjusted to 1929 r 100

RETAIL PRICES PaID FOR

Year

Prices Received At Farm

All Commodities Used in Production Fertilizer

Farm Machinery

Equipment and Supplies

1927

95.2

98.6

9o.O
100.7

100.6 100.6
100.0
99-.3

103.6

1928
1929

102,0
100.0
86.3

100.6
100.0
95.2 82.9
72.7

101.4
100.0

100.0 96.9

1930
1931

96.3
85,2 78.6
75.7

59.5

88.4
76.1

98.0

1932
1933
1934

44.5
47.9
61.6

92.1 89.5 94.1

96.7

73.4 85.0
85.7 85.7

73.8
80.0

80.1
80.1

1935

73.9

78.4
73.8 78.4

1936
1937 March

78.0 87.6

97.3 98.6

80,8
83.0

94.5

-33-

TABLE 8
KXPSI\TDITURES FOR FERTILIZER CO&IPARED WITH
Fifflvl

INCOiVE

Data Compiled by U. S. Bureau of Agricultural Economics

Year

Expenditures for Fertilizer ($1,000,000)

Gross Income from Farm Production (^1,000,000)

Expenditvires for Fertilizer in Per Cent of Farm Income

1927

217

11,516 11,741
11,941

1.87

1928
1920

275
276 270

2.35
2.32
2.86 2.73

1930 1931 1932

9,454
6,968
5,337 6,406 7,276

190
113 122
150

2.12
1.90
2.07 1.94 1.80

1933 1934
1935
1936

165

8,508
9,450 1/

L70 1/

1/ Estimated by National Fertilizer Association.

-34-

price index of fertilizer shoT7ed comparativtjly littlo rise, duo in the msiin to
the competitiou which arose after the invalidation of the NRa Code, and the

drop in rar material costs.

Clicirt

3 of jiAhiliit 3 indicates the

remarkable parallelism betTjeen the

Chart 4 gives the Over a
Ig-

farmer's gross income and the amount spent for fertilizer.

per cent of the farmer's gross income which is spent for fertilizer.

period of the lost t\7enty odd yet.rs, the farmer has alT?ays spent from
per cent of his income for fertilizer, ncver more and never less.

to 2g

The variation

from year to year is never more than 1 per cent.

Givea, therefore, the gross

income of the farmer in any year, it is possible to determine within 1 per cent

hoT much rill be available for fertilizer manufacturers.

Moreover, the farmer

ordinarily cannot pay for the fertilizer consumed until the crops on which the
fertilizer is used have been harvested and sold, v;hich creates a problem of pro-

viding credit.

Furm Creait Very Important Problem

The whole problem of the farmer's use of credit in obtaining farm

supplies as well as household supplies is an extremely important and interesting

one V7ith many ramifications.

Tuo purchase of fertilizers on credit i3,of course,

but one phase of this larger problem.

Because of the significance of this

problem a considerable aidount of work has been done on it in the past by the
Bureau of Agricultural Economics, United States Department of Agriculture and

by some of the state agricultural experiment stations and more recently by the
Farm Credit Administration.

;u-inual

Survey of Fertilizer Credit

In thu annual survey of credit in the Fertilizer Industry made by the

Division of Farm Finance, the Bureau of Agricultural Economics, certain data are
'vaic.i

publish jd_/inrlioate at least in a general way the importunc>j of credit in this

-35-

industry.

This survey is conducted in cooperation v/ith The national Fertilizer

The 1934 survey'-'-) covered 97 manufacturers who had in 1934 sales

Association.

amounting to $48,000,000.

They estimated that their 1935 sales in 25 states

identical with their 1934

would be 16 per cent on

experience.

a credit basis v/hich vms

Of these 97 firms, 24 reported that they did not expect to use

credit from banks, 26 reported they expected to use bank credit to about the
sam.e

extent as in 1934, while for the entire group it is expected that bank
l^y

credit for 1935 Y;ill exceed credit for 1934

per cent.

At the

sarp.e

time, these manufacturers estimated that farmers in 1935

bought 29 per cent of their fertilizer on credit as compared v;ith 26 per cent in
1934.
It

should be noted that tnese percentages refer to tonna^^e and the percen-

tage of farmers using credit in the purchase of fertilizer may be something quite
different and probably ccnsiderably higher since farmers purchasing.' li^rger ton-

nage may not have needed credit to the same extent as smaller farmers.

The 1933

figiires issued in November of that year showed that during the year 35 per cent

of the farmer's purchases of fertilizer were on credit basis.

Ruinous Credit Practices

Mr. Charles J. Brand,

executive director of the National Fertilizer

Association, at the 1932 convention of that association, balked about the ups and
downs of aCTiculture and discussed the problems of the industry.

He mentioned

ten problems of the industry.

and
tv/o

He mentioned ten problems of essential importance

of these were as follovfs:

"ruinous credit policies" and "a vicious

In this connection
llr.

practice of deferred settlements,"

Brand referred to his

address to the convention in June of 1927 entitled "For Better or for Worse
Our Industry."

Since it

v/as

in this address that he originally mentioned the two

s .em

problems quoted -jbove, it would

(1)

thnt the situation had not mjiterially im-

Department of Ai?riculturo, Bureau of Agricultural Economics, Division of yrrm Finincc;, Mimeographed Report, November, 1934.

-56-

provsd in the time T7hich had lapsed from 1927 to just prior to the code.
At the 1935 convention,
IVIr.

Brand, in speaking on pre-codal conditions

of the Fertilizer Industry, said:

"Bocause of our genuine and proper desire to sell as large a quantity as possible for cash, it was our custom to have an extraordinarily wide spread between cash and time prices that often resulted in criticism of the industry, much of it unvrar*'-. ranted and based upon misinformation.
"\-e

pursued credit policies that commonly resulted, in years of diminished agricultural income, in a burden of bad debts and uncollected accounts that imposed unfairly upon the frugal and prudent farmer who paid his bills. V/e often pursued a loose fallacious credit policy intended to reduce unit overhead costs by obtaining larger tonnages over which to distribute such costs, vith the result that frequently v:e garnered in bad debts far in excess of any saving made in overhead." (1)

Competitive Practices

Competition for the farmer's fertilizer business is alvrays keen, but

in years follov.ing a decline in agricultural income with the resultant diminished

demand for fertilizer, each producer of fertilizer is tempted to utilize every

conceivable. method of competition in an attempt to maintain his
ness.
vol\irae

of busi-

This has in the past resulted in a state of competition from vhich so-

called "unfair trade practices" arose.

Many of these practices had to do rith methods of price cutting, of

Khich the most serious
ivas

perhaps the guaranteeing to the dealer or farmer of

uv.n

prices against decline, not only as to the seller's

of competing producers.

prices but as to those

This

v^as

especially serious because a large percentage

of fertilizer sales

v.'ere

made on a credit basis, due to the farmer's inability

to pay until he received the proceeds of the crop on which the fertilizer nas

used.
lo7/e3t

Tne purc haser

bettlbment at the end of the season was based upon the

price at which any producer had offer e d him that particular grade during
VariationPi in duality v/ere often ignored, and the sale of a vwry

the season.

(1) 'V'jur Iiiuustry

Und^r the Code," Giiurles j, brand, Proci^odings of tk'^ Kiovent h rjinual Convention of Tho ^''ational Fortilizer uOHuciMtinn The National Fwrtilizer i-^aociotion, 19:!>f>, p. IM-aSj.
,

-S7-

small tonnage at a low price late in the season by some producer

\-ho

had not

been able to move his inventory, caused heavy losses to numerous other producers.
In ntiny instances retoractive settlements were made on cash sales, if
at the end of the season prices had declined below those which a particular dealer

or farmer had had to pay.

Coi.ipetition often resulted in the unvijise extension of

credit, and large industry losses resulted.

Price cutting by rebates and truck-

ing allovances, special containers without adequate charges therefor, or by

offering a multiplicity of grades which deviated only slightly from the standard,
Tiere also extensivelj^

utilized as price cutting vehicles.

TjVrchouses were often

established at strategic points and sales iinde from them at factory prices.

lu

many instances materials such as nitrate of soda

order to influence the sale of mixed fertilizer.^

vrere
'

used as loss-leaders in

Seasonality of Deaand

A narked seasonal demand for fertilizer is brought about because of

the fact that most fertilizer is used mainly at Sprine^ planting time.
It x^as

alvrays been difficult to get the farmer to anticipate his fertilizer requirements

by advance purchases.

In

-one

main, this has been due to such factors as lack of

cash or credit prior to planting time, inadequate storage space for fertilizer
at the farm, and fear on the part of the farmer that the product v;ould deteriorate
^

before he is ready to use it.

Tiie

seasonality problem has become steadily more

acute

T'ith the

advent of the automobile and the good roads which, together ?;ith

keenly competitive conditions in the fertilizer industry itself, have contributed

to the farmer's postponement of his purchases until virtually the last minute and

then demanding almost iriimediate delivery of his fertilizer requirements.

(x) ;in

excellent deijcription covering the above described conditions in' t;u; Fertilizer Inuustry in the pre-codal period was made by Mr, Charles J. Brand, in his address entitled "Our Industry Under the Cude", us reported in the Frocoedings of the Eleventh Annual Cunvention of the Motional Fertilizer Aseooi-ition, Tiiu Kf;tional Fertilizer Association, 19'65, pp. PA-yjT.
'

TivBLE 9

P^.CSNTAGS OF TiiX TAGS SOLD :'JLACH KOIJTH IN THE 13 SOUTHERN STATES BilSSD 01" THE RECORDS FOR THE FOUR SEiLSOljS, 1926-27, 1927-28, a 192S-29 and 1929-30.(1)

Month
^obrurry
lul'^rch
.
.
. .

Per cent
.

Per cent

ADril

. .

9.89 17.85 36.28 20.45

Total four months

84.47

May
Juns . . . . July .....
Aua'ust
. .

3.92 1.30
.43 1.00 2.95 2.27 1.47 2.19
Totiil eight

September October . November Dscember .

.

months

15.53 100 00
.

Table 10, which follor^s, gives the same data for 1934 for 17 states.

TABLE 10
S.iLSS OF
-vliyJlD

FERTILIZER

Ta:^

TAGS IN

SEVEIviTEEl'J

STaTES IN 1934.(2)
Per cent 9.5 13.9 33.5 21.0 77.9
4.7 1.3 0.7 2.7 4.5 3.3 2.3 2.6 22.1
"To"oTo

Month J-nuary Febru-ry MoTch April

Total four months

Tons 363,246 533,146 1,284,149 806,735 " 2,967,276

May
.June

July August September October November December

Total

eii^ht

months
3,

180,379 50,797 28,382 103,246 172,457 130,153 87,974 98,206 851,594

838 ,"870

Grand Total - 12 months

Tl) iipplication for Presentation of a Code of Fair Competition of the National Recovery Administration, submitted august 2, 1933, by the National Fertilizer dissociation.
(2)

Table adapted from Testimony K^elating to the Code of Fair Gompetitjcn for the Fertilizer Industry, Sonato Finance Committee, April 12, 1935, p. 25.

-59-

This marked seasonality is indicated by the following tabular pre-

sentation of tax tag sales in thirteen Southern states.^

'

As is evident from the two preceding tables, producers of mixed

fertilizers must obtain the major portion of their volume of sales in the very
limited period of four months, and this has led to the employment of not less
than 50,000 dealers and agents in order to book all possible available business4

Production Capacity
These buying practices of the farmer have placed an increased burden

on the manufacturer.

The average manufacturer lacks adequate storage space and

in many cases cannot afford to carry a heavy inventory which v/ould necessitate
specul::tion in raw materials.

Kaw material costs in 1934 constituted 62.3 per

cent of the total cost of mixed fertilizer at the manufacturer 'ti plant.

The dry mixing plants usually have a production capacity vhich will take care of their peak demand.
It nppears quite certain that if even a major-

ity of existing plants operated for any considerable period prior to the active

selling seasons, a substantial oversupply of mixed fertilizer could be produced.

Hovrever,

as v:ith all seasonable merchandise, producers natur illy limit their

productive operations to the minimum period possible immediately prior to the

time orders need to be shipped.

Reference to the excess productive capacity of

these plants

".nd

of the industry in generil, therefore, should be subjected to

hov;

very careful scrutiny as to

K-hich

overproduction capacity is defined.

For firms

rmnuf'.cture superphosphate, productive cap.icity is largely a matter of

sufficient capital and storage space for the finished product since sulphuric
acid can be purchased in the open market.
(1) -The T^rs of these states require that these tax tags be

purchased from the sales do not indicate state and attached to the fertilizer '."hen sold. Their is from 3 to shipments shipments but it haa been estimated that the lag in 4 weeks after the purchase of the tags.

-40-

Three Types of Plants

As has been indicated, the fertilizer industry comprises three

different types of plants, each of which has different problems.

Of the 968

plants engaged in the industry during 1954, 772 purchased all of their raw

materials and merely mixed them in the desired proportions.

Although many of

those dry mixing plants were owned by the large fertilizer manufacturers, a

preponderant number were owned by small operators.

One hundred ninety-six

plants manufactured superphosphate, one of the constituent raw materials in

most fertilizers.

One hundred of them also manufactured the sulphuric acid

necessary for the production of superphosphate.

These acid plants necessitate

a relatively lirge capital investment and in general are run continuously all

ye r .
r-

Production in

superphosphate plant is much more uniformly sprea d

i

throu ghout the year

t han

th e case of the production of mixed fertilizer .

The process of racking mixed fertilizer is ordinarily divided into two processes;
the first of which consists of the production of bo-called "base" goods and

precedes by about four months the second process, which is the mixing of the
fertilizers into particular grades after the orders have been received.

Relative Import :nce of Different Departments

Some indie
\t

ion of the relative importance of the various subdivisions

of fertilizer manufacture is indicated by Table 11.

This table shows the per-

centage of the

tot.-.l

number of man-hours worked in diffurunt departments of the

363 plants v/hich

'.nswored the

questionnaire of The iviational Fertilizer Associfi-

tion for statistics on their operation in the Fall season of 1932 and the Spring

E3aon of

IT-*??

reppectively, us Wbll as for the fiscal year ended June 30, 1933,

-41T^iBLE 11
?ERGEi;Tyi.aE

OF ii.CTIVITY IN KICE DEP.iETiiSNT B-iSSD ON r-LiN-KOUHS V'ORIJED BY aiPLOYEES YK\R SITDED JUNE 30, 1933.(1)

Departrrzent

Fall Season 1952

7.3

Spring Season 1933

5.0
4.0

Fi seal Year Ended June 30, 1933

Sulphirric ..cid

4.4
5.4
76.6
6.0 7.6

Superphosphate

8.6

Dry Mixed Fertilizer

V7atchmen

63.1

82.6
4.4
6.0

9.8

Mechanics
TOTAL

11.2
100
.

100.0

100.0

Seasonality of Production
The follov/ing tabulation illustrates the seasonality of production,

indicating for a three-year average, 1932-1934, inclusive, the percentage which

each month's man-hours bears to the total annual number of man hours. (2)

TABLE 12

SEASONALITY OF
A^/ERAGE PER CEIJT OF
AWI.'UiVL

EBIF'LOYI/iSlNiT

lvL\N-HUURS WOFdCSD

EACH MOOTH

1952-1934
Jan..

Feb.

Mar.

Apr.

May
8.8

June
b.5

July
.

Aug.
6.0

Sept.
7.7

Oct.

Nov.

Dec.

8.1

8.8

10.4

16.4

'j

7.8

7.4

7.5

Distribution Channels and Methods

The annual movement of fertilizer iimounts to around 6,000,000 tons

distributed to some 2,225,000 farmers.

Each state contains some of these

customers although the market is more highly concentrated in some areas.

Factual statements by members of the Fertilizer Industry before the National Recovery Administration on the Code of Fair Competition for the Fertilizer Industry. data. (2) Calculated from the figures derived from the Bureau of Labor Statistics
(1)

-42-

Further, it uas seen that

the great bulk of the total United States tonnage

is sold in the first few months of the year.

The geographic seasonal variations

are of course influenced by the variations in the crops raised.

Factors in or Affecting the Methods of Distribution

Engaged in the distribution of these large quantities of fertilizer

to these nillions of customers are a great many individuals,

firms and groups.

These include the manufacturers and mixers themselves and various types and kinds
of distributors (brokers, v/holesalers, agents, dealers, retail stores); salesmen

on salary and, or, comaission; and special type farmers' cooperatives; as T;ell
as niomerous contributory agencies or services such as transportation,

communica-

tion,

credit and the like.

Distribution of fertilizer both as to kind, quantity,

and channels is also influenced by various government and state agencies (espec-

ially the latter) through their educational, regulatory and advisory services.

Channels of Distribution

From the available data and general

Icnov.-ledge

of the industry, it can

1\[RA

safely be stated that prior to, and after the invalidation of the

Code,

the

fertilizer manufacturers and mixers probably used and still use every knovm

method of making sales and developed for their use every conceivable type of
distribution chnnnel.
At the time of the c-dification of the industry its products v^ere

moving to its final customers through at least the following channels:

1.

direct from manufacturer (factory or mixer) to farmer,

2.

from manufacturer to dealer (retail) to farmer,

3. loanufQcturer to local farmer cooporatives to farmer,

4. from nanufncturer to wholesale cooperative to local cooperative to

f rimer and
,

5.

from wholesale to retail dealer to farmer,

-436.

In addition to the above channels

there was also some volume

In some sections of the

moving through agents of various types.

United States, it
v^as

customary for a manufacturer to designate

as an agent a farmer who made some sales to his neighbors thus en-

abling him to purchase fertilizer for his own use at a discount.

On the other hand, there were company agents on salary or com-

mission.

During the life of the code, some extremely interesting

points developed in connection with this matter of agents which

need not be discussed.
The various dealers and agents utilized by fertilizer companies may
be listed according to the following categories:
1.
2. 5.

Merchant agent
Farmer agent

Cooperative agent

4.
5.

Merchant dealer
yarmer dealer

6.

Cooperative dealer

As many as 50,000 agents and dealers have been used in one year by the industry.
It is a well known fact that there are niimerous kinds of stores,

especially in the smaller towns, which sell fertilizers.

Among these are hard-

ware stores, farm implement stores, feed and seed stores, general merchandise
stores and general stores.

Since there are several hundred thousand of these

kinds of stores throughout the farming regions there would seem to be no dearth
of Qvnil-'ible retail outlets for the fertilizer producers
v;ho

desire to sell

through them.

Farmers as Aoents or Dealers

The practice of giving agents' or dealers' discounts to farmers buying
in
ltii-e

qumntiticiS of fertilizer,

some of which they may or imy not havo sold

-44tc their neighbors apparently led to serious difficulties prior to the Code.

On this point

Ivir.

Brand, the Executive Secretary of the National Fertilizer

Association, speaking of the pre-code days said:

"We gave dealer prices and terms to all consuners desiring to buy in car lot quantities, with the effect of a constant tendency to crumble all prices to the relatively low level extended only to our best dealers, namely those possessed of ample cash and good credit."
It would appear that at times some producers classified farmers as

agents, in spite of the fact that these farmers themselves consumed 90 per cent

or more of the fertilizer sent them in ther alleged capacity as agents.

Co.iClusion on the System of Distributing Fertilizers

There are not available sufficiently detailed data on the system of

distributing fertilizers (methods and costs) to make possible a scientific
appraisal as to the degree of economic soundness or unsoundness now existing.
However, there is ample evidence that many of the practices as regards sales

methods, prices, discounts and credits are economically unsound.

Further evidence of what may be considered an uneconomical aspect of

the system of distribution is seen in the following.
!-niiually

Tnex^o are

distributed

approximately 6,000,000 tons of fertilizer.

Seventy per cent of the

t'btal,

or about 4,200,000 tons are distributed by some 50,000 agents and dealers,

T?hich is equivalent to aniaual sales per agent or dealer of only 84 tons.

Tnua

the gross income from fertilizer commissions of such a dealer or agent would

be from $100 to |;200.

T.iat

such a large number of small market outlets is disadvantagoous

to the industry is well recognized in the follov/ing statement:

"Too many dealers are trying to sell fertilizer. Every fertilizer manufacturer v/ants a dealer in every town. But the manufacturer would be better off, in my opinion, and the dealer would be better

-45For if the manufacturer had fer/er but exclusive agents. all of them could then do enough business to justify their putting into the business more time and more service to the farmer " 1
off,
.

Results of Industry's Instability

The dependence of the fertilizer industry upon the farmer with his

uncertain crop and financial instability, the haphazar-d credit practices of the
industry, the strain upon the industry because of the so-called "unfair methods

of competition," the extreme seasonality of the demand for fertilizer and the

financial burden placed on the large producers

?/ho

must manufacture the "base

goods" of the industry all year round and finally the chaotic condition of the

distribution channels
loee money.

all these have caused the industry as a v7hole to

Leading chemical concerns noted for their managerial ability such

as Allied

demicol and DuPont rho are

l;irge

producers of certain of the leading

raw materials entering into the production of mixed fertilizers have never gone
into the mixed fertilizer business.
In reviewing the history jf the DuPont

Company in a recent article in Fortune Magazine ^^ it was said that the DuPont
Company htd considered this matter in 1931 and again 1929 but had definitely
tiirned it down as being unwilling to enter a "oick" industry.

"Change and Cooperation," by L. W. Ro-^ell, Vice-President, Swift & Company -and President of the N clonal Fertilizer Association, Proceedings of the Sixth Annual Convention of The National Fertilizer Association The National Fertilizer Association, 1929-30, p. 12-13. DuPont II: "An Industrial Empire" Fortune ,' Volume X, No. 6, December, (2) 1934.
(1)
,

46-

RAW M.1TEELILS

-47

CHAPTER IV

RAW MiVTERIALS
In the study of the rertilizer industry, it is essential that careful
cons iderfat ion be givan to the sources and prices of raw materials since they rep-

Eeaented

the most important factor in the cost of producing mixed fertilizer.

In 1935 and 1934, materials represent 631 per cent and 62,3 per cent respec-

tively of total cost of m.anufacturing mixed fertilizer.'

'

The follov/ing tabul-\tion gives an idea of the trend of mixed ferti-

lizer prices and the wholesale prices of fertilizer materials in recent yaars^

l.'BLE 13
AInIMJAL

AVERaGS IiroEX

0.7

ViHOLSSiiLS

PRICES OF MI]vED FERTILIZER

(1929 r 100)

1927

1928 100.1

1929
100. i

1930

1931

1932
71.3

1933
66.3

1934
74.6

1935
72.6

1936
70.3

95.6

96.3

84.3

iiNNTJAL AVSR/IGE llTJZl

OF VMOLES.iLE PRICES OF li^ERTILIZSR IfeTERIiiLS

(1929 X 100)

1927

1928

1929

1930
92.9

1931

1932
72.6

1933
71.5

1934
72.8

1935
72,0

1936
71.5

104.4

102.7

100.0

83.4

The drop in

ravj

material prices would

indic=-.te

that it, rather than

enyfhing else, is the most important factor in the drop in price of mixed fertilizer over a period of years.

PriC'i Fiictors

Affecting

Rav?

Materials

At the present time, prices in the jj:norican market for fertilizer

ri;7

raaterinls seem to be largely determined on the bo.sis of supply and demand,

(1)

gjner-'.l

Fertilizer

Report on i/lixed FertiliZ';;r Cost and Salcfi Pricas, Tho Ntion4^1 iv -ociation, Ootobur 26, 1934,

-48-

This has not always been so, as certain countries formerly had natural nonopolies

of some particular fertilizer raw naterials.

Cartels still exist which attempt

to control the prices of fertilizer naterials in various parts of the world.

They are not able to do this in the United States due to the fact that we produce
a large proportion of our own requirements and have a capacity in time of emer-

gency to take care of our entire demands,^

'

Industry Main Users of Materials

The fertilizer industry uses the predominant portion of the annual output of each of the fertilizer naterials Wjiich go to make up the component parts
of a mixed fertilizer.
yerir to

The percentage used by the fertilizer industry varies from

year due to v-^rious factors such as alternative uses of particular mate-

rials, prices, etc.

An indication of the importance of the fertilizer industry

in the consiii^ption of these materials is indicated by the fact that, in 1934, the

fertilizer industry used 70 per cent of the total consuiviption of chemical nitro-

gen in the United States; 92 per cent of the potash materials; and 81 per cent
of the phosphate rock.^
'

Nitrogen, Phosphorus, and Potash

ibS

has been indicated in a previous chapter, the three main elements

contained in fertilizer naterials are each important to a growing plant for

different reasons.
(1)

Nitrogen produces rapid development of the leaf and other

Its The Uiiited States has always had an adequate supply of phosphate rock. independence with reference to nitrogen has been largely due to the developnent of processes of fixing nitrogen from the air. Potential independence with reference to potash is a development of the past few years in exploiting recently discovered natural resources of New Mexico. J. W. Turreutine, "Potash," Mineral Industry 1935, McGraw Hill Publishing (2) Company, New York, Tables pp. 47C-476. "Crude Phosphates and Superphosphate," Ujiitcd States Tariff Commission, R'sport Ho, 100, Second Series, 19555, Table 1, p. 4. "V.'orld Production and Consuinption of Fixed Nitrogen," Chemical & Metallurgical Engineering, Vol, 42, No. 1, p. 54.
,

-49-

vegetative parts of
cotton.

tb.e

plant and hastens the blooming period of such crops as

Phosphoric acid stimulates early root growth and is, therefore, useful
It also stimulates the growth of

in promoting the early maturity of crops.

fruits and seeds as compared with more vegetative growth.

Potash stimulates the

formation of starch, gives stiffness and rigidity to the stem or stalk of the
plant and aids it in its general healthful development which promotes disease

resistance.

Other Fertilizer Elements

Soils ordinarily contain sufficient quantities of other elements

beneficial to plant grovrth although one of the points of emphasis in recent

fertilizer manufacture is an increasing amount of attention to the inclusion
of other chemical elements such as magnesium, calcium, sulphur, etc., in which

particular soils are found deficient.

As yet, the quantities of these other

elements used have not reached sufficient size to be an important commercial

factor in the consumption of such chemical elements.

Fertilizer Grades There were 1,291 different combinations of fertilizer materials sold
in the United States in 1934^
'

and each analysis or grade has a separate desig-

nation to identify it.

The customary method is to express the percentage of

different plant foods in o given fertilizer in a series of numerals such as 3-8-3

which ordinarily expresses percentage of tonnage and means respectively 3 per cent
nitrogen, 8 per cent phosphoric acid, and 3 per cent potash.

This particular
One ton of this

formula happens to be a popular grade of fertilizer for cotton.

grade would contain 60 pounds of nitrogen, 160 pounds of available phosphoric

acid, and 60 pounds of potash -'M^lng a total of 280 pounds of plant food per ton

of fertilizer.
(1)

A rjurv'-::y of plant Food Conoumption in the United States by A. L. Mehr-ing and H. R. Smalley, National Fertilizer Association, Table 2, p. 14.
,

-50Us<3

of Fillers in Fertilizers

Some critics assume because in one ton of fertilizer there are only
280 pounds of available plant food that the balance consists of fillers.

As

a matter of fact the bulk of the remaining content of the ton of fertilizer

consists of materials that are naturally present as a part of the chemicals

used in

iiaking

mixed fertilizer.

Every hundred pounds of chemically

p\ire

nitrate

of soda contains 83.33 per cent of natural materials that are necessarily present
in chemical combination with the nitrogen
'.fhich

makes up the remaining 15.47 per

cent.

The customary and standard strength of this superphosphate is 16 per

cent or 320 pounds per ton of available phosphoric acid.

The remaining 1^680

pounds are not materials added but are materials which occur naturally in phos-

phate rock and that in the present processes of producing superphosphate by the

use of sulphuric acid remain mixed vdth the superphosphate so produced.

Similarly the potassium, although expressed in terms of potassium

oxide (KgO), is not used as such but occurs in the form of potash salts.
These

salts are mixed with various chemical impurities in their natural state and are

ordinarily used in mixed fertilizers vith a large percentage of such impurities

still contained with the potash salts.
It is true that fillers,

that is, materials ether than those naturally

coming with

ravr

materials used, are sometimes added to fertilizers and technically

The fillers as such have no value as a

are known as fillers and conditioners.

plant food but certain mater icils such as finely ground limestone, pulverized pent,
etc. are alleged, to condition the soil.
It
is also alleged that fillers assist in

making the fertilizer more readily adapted to machine spreading and are therefore
necessary in the manufacture.

-51-

Source of Phosphorus in Fertilizers

Since phosphorus in fertilizer is the most costly ingredient, and

raore

phosphates are used than either nitrates or potash, it night be

to a consideration of phosphates.

v;ell to

limt ourselves

While phosphorus is obtained from bones and also from basic slag (a
by-product in the production of steel), the main source of phosphorus for fertilizers is phosphate rock and other phosphate material, such as apatite; this
differs from phosphate rock principally in physical form.
The phosphorus con-

tained in phosphate rock and apatite is not readily available for assimilation

by plants and most of it is chemically treated with sulphuric acid to make more readily soluble for plant assimilation.

it

The estimated consumption in the United States and its possessions of crude phosphates over an extended period of time shows that approximately 90 per
cent of the total domestic consumption of crude phosphates is used for the pro-

duction of superphosphates.

Sources of Crude Phosphates

The United States is independent of foreign countries with regard to

its supply of crude phosphates.

Imports since 1929, have equalled about

g-

of

1 per cent of domestic production,

Exports amount to approximately 33 per cent

of the domestic production.

At the present r.ute of production,

(2,000,000 to 3,000,000, tons of

phosphate rock annually) the United States reserves of these materials will
last for
r.n

indefinite period.
-i

The VVastern sources of supply are low grade

but they represent

potential source if the other high gr;^de deposits over

-ipproach exh-.ustion.

Crude Phosphates controlled by Fertilizer Manufacturers.

Ho recent studies h'ive been made of the extent to f/hich fertilizer

manufacturers ovm the sources of crude phosphates, but the principal producers

-52-

of these

Ei;iteriLrls

are generally alleged to be tne lr>rger fertilizer manurar;

factiirers.

This is the only one of the principal fertilizer

materials in

which the fertilizer nanufacturers have a controlling interest

^-^^

Phosphate Rock Production

In 1935, 79.7 per cent of the total tonnage of domestic output of

phosphate rock was fui-nished by Florida.

The Brovm phosphate fields of

Tennessee accounted for about 18.1 per cent and the Mont ana. -Idaho fields for
about 2.2 per cent.'^^

The first two fields by reason of the uniformity of

grade of proiuct, favorable geogr.iphic location and relatively low cost of

production have easily maintained the lead in the country's production. Because of the extent and regularity of its occurrence in Florida, pebble phos-

phate has been cheaper and it reaches a wider market than the Tennessee phosphate.

The latter, horever, has the advant;.ge of a good location, particularly

with respect to the rapidly grov/ing fertilizer-consuming regions in the Middle

West.

Price CiUotations for Phosphate Rock

Tabulations on prices covering quarterly quotations on Florida land
pebble give and indication of the high degree of stability of the price of the
chief crude phosphate sources over a period of years,
Ijo

study has as yet been

that some five or

made of this price inelasticity but it is

hi:-,hly signific;int

six large firms control the bulk of phosphate rock and pebble production in the

United States.

According to the United States Tariff Commission about a dozen

of the large fertilizer manufacturers are large producers of phosphate rock.^"^'

(1)

is h<ire recognized that the large packing companies have plants producing f'irtilizer and that they control a large source of organic nitrogen carriers but they are not engaged in manufacturing fertilizer as a business and only

It

use the organic nitrogen carriers when other fertilizer manufacturers would not ordinarily use them, namely, when the blternative demands for thase products justify it. Mineral Yearbook: 1936, U. S Bureau of Mines. (2) "Crude Phosphate and Superphosphates," U. r.. Tariff Commission Report No. lOjl (3)
,

1935, p. 11.

-53-

Profit Margin in Superphosphate

It is a frequent claim of manufacturers of superphosphate that the

product is consistently sold at an unsatisfactory margin of profit, and at

times, below the cost of production.
T.._t

these claims are sincerely made by

industry leaders is indicated by the fact that the "inadequate" prices obtained
for superphosphate are often cited at industry conventions as a m^'jor industry

problem.
To arrive at a definite conclusion regarding these claims,
it would

be necessary to have access to definite cost figures of a reasonable cross

section of the various types of plants producing superphosphate, a privilege

not possible.

There are, however, a nuraber of salient facts having bearing

on the situation which are worthy of discussion.

Concentration of Control
As indicated in Table 14, six of the largest companies in the industry

own approximately half of the total number of the plants producing superphosphate.

These companies are the principal producers of phosphate rock, and they

also manufacture sulphuric acid in 49 of the 91 plants which they own and operate.
As practically all of the superphosphate produced in this country is manufactured

by fertilizer manufacturers, and practically none of the product is imported, it

is obvious that there is no competition from outside of the industry.

Table I4,'?ives six companies which operate in all fertilizer consuming

arecs
ev.st

of the Miiiait..,ippi River.

They are the dominant factors in both pro-

duction and distribution, and it ia generally known that the resale prices for
superphosphate established by these
various districts or zones.
companies are the prices in effect in the

-54-

TjIBLE 14

PLANTS OF SIX OF THE LaRGER COM'iVNIES

1933

^ -^ ^

Name of Conpany

Number of Plants Manufacturing Acid

12

Superphosphate Plants Not Manufacturing Acid

Dry Mixing Plants

Total
25

American Agricultural
Chernical
Co.^'~''

Amour Fertilizer

V/orks^^^

12

8 4

21 22

International ;ioni Agricultural Corp J(2]

18

Royster Guano Go.

(2)

4
2

5
6

14
25

Swift & Co. Fertilizer Works (2)

17

Virginia-Carolina Chemical Co. (2)

19 49 42

35

51

142

Being, producers of the raw materials, these six large companies have cost advantages over smaller competitors who must purchase phosphate rock and

sulphuric acid in the open market.

Other factors being equal, the larger com-

panies selling superphosphate at prices which they had themselves established,

should derive a greater net profit from such sales than v/ould their small
competitors.

Competitive Position of Independent Operators

To offset this, however, the smaller independent operator who purchases

phosphate rock and sulphuric acid has a smaller proportionate investment in equipment and can in some years buy sulphuric ucid in the open market at a price below
the cost of the production of sorae of the older acid plants owned by fertilizpr
(1) Table compiled by the Fertilizer Industry Study frora plant listing? in the j'jnerican Fertilizer Eandbook-1933 edition, Ware Brothers, Philadelphia,
(2)

Pennsylvania. These companies have large producing plants in Maryland.

-55-

manufacturers.

Furthermore, throut^h the advantage of direct and, in most cases,,

personal supervision over production activities, these smaller independent producers may also be able to effect operating economics which the largR producers

with less efficient superintendence do not attain.The conclusions of a study made by the IIRa authorities indicate that

smaller independent companies show a more consistently profitable business than

that of their larger competitors.

Unfortunately, the data of this study are

Tiie

not available for public inspection.

fact that smaller independent companies

do a more consistently profitable business than their larger competitors is in

corroboration of the opinion of experts in the field that the difficulties of

the larger companies in deriving a profit from sales of superphosphate as well
as mix;d fertilizer is due in a large measure to the liabilities they have
assiimed in spreading plants in unnecessary profusion throughout each consuming area.

li.iijorts

Imuort/S or su,>er^^os^hate are relatively insignificant in cor.iparison

with domestic production and amounted to only

.9 of 1 per cent of the domestic

production in 1933, .6 of 1 per cent in 1934 and 1.0 per cent in 1935.
indicates the imports for each of these three years:

Table 15

TABLE 15

SUPERPHOSPHATE

IIvIPORTS

(^^

(Short Tons)

1933

1934

1935

Value

Value

Value

Quantity
25,549

In Dollars

Quantity
18,265

In Dollars
$?i45,540

Quantity
23,008

In Djllar
$^40,72!:

$315,317

Exports
Tne exports of superphosphate consist mainly of standard superphosphate

although
(l)

florae

of the hi/^her grades ore shipped.

Mo.'-:t

of these exports go to

"Ci-uue Phosphates and Sui)oxi>.tos^.^te," U.S. Tariff Curnmi^sion h>j>>urt No. 1935, p. 12.

1U0~

-56-

Canada and to Cuba and Table 16 is indicative of the tonnage and value of these superphosphate exports:

TABLE 16
SITEHPHOSPHATE:

UNITED STi^TES EJI-ORTs'^^

Value
In Dollars
,

C'uantity

Year
1927 1928 1929 1930 1931 1932 1933 1954 1935

Short To ns

120,408 99,247 95,S32 125,058 9x,377 26,749 39,616 56,248 61,561

.$1,615,466

1,510,557 1,489,476 1,595,450 940,688 258,896 533,966 606,142 533,883

Price ruotations

Price quotations for standard superphosphate vhich is quoted on a

15 :"er cent .P2O5 basis, run of pile, bulk basis f.o.b. Baltinore in dollars

per short ton is sho-rn in the follo\ving tabulation:

'i:i\BL'Z

17

SUPERPHOSPHATE:

PRICE (^UOTaTIOKS, F.O.B. B/lLTIMORE^^^

1930

Month
January-

1928 $8.50 8.50 9.60 10.00

1929
^10.00

19S1

1932

1933

1934

April July jctober

.10.00

9.50 9.50

$9.50 8.50 8.50 8.50

$8.00 8.00 8.00 7.50

$7,50 7.50 7.50 7.00

$6.50 6.00 7.00 7.50

50

7.50 8.00 8.00

As perhaps vould be expected, the lov point of prices ras reached in

1933.

This no doubt

'.'as

a reflection not only of the generally depressed con-

dition of industry but especially of the sharp drop in fertilizer sales in 1932.

There

v'as

some expansion of fertilizer sales in 1933 in spite of the continued

drop in farr. income.

Op. cit., p. 14, (2) Op. cit., p. 15.
(1)

A reflection of this nay perhaps be seen in the upturn of

-57-

prices in superphosphate in the Fall of

19153.

Demand Versus Cost as price Determinant

The iiicreasad price of superphosphate after 1935 could not be

attributed to any change in the price of phosphate pebble which reraained practically constant.
The sane holds true for the price of sulphuric acid, the
The riarket quotations on 660

other chief ingredient in making superphosphate.

Baiine sulphuric acid hnve

remained

ali'iost

constantly at al5.50 per short ton

since June, 1926.

In spite of such rigidity in the prices of phosphate pebble

and sulphuric acid, in January, 1934, the price of superphosphate was 46;9
cents per unit of phosphoric acid
cents uhich
^r.s

un increase of 7.8 cents over the 39.1

In

the price in January 1933, or an increase of 20 per cent.

January of 1935 the price stood at 50 cents per unit, an increase of 10.9 cents
over the price in January 1933, or an increase of 27.8 per cent.
v?ay

There is no

of definitely deter: lining hov rauch of this increase, if .any, was due to the
bu3i:.'.ess.

upswing in

It rdght be safely said, however,

that the Code did

nothing to prevent such seemingly \inwarrftnted price rises.

While, there has been:'a condiderSble drop from the 1929 level in
the wholesale prices of fertilizer materials in general,
(as we have seen in

Table 13) there seeris to be an illusive factor in the rise of superphosphate

prices, notwithstanding the fact that the raw materials which enter into the

production of superphosphate have remained fairly constant in price.

As has

been pointed out in Table 14, six of the largest companies in the industry own
approximately half of the total nuraber of plants producing superphosphate in
the United States.

This fact may have some bearing on the rise of superphos-

phate prices, since it is generally known that the resale prices of superphosph^.te

established by these componies are the prices in effect in the various

districts or zones in the country.

-58-

The iuportaiice of these facts, United as tixey are, I'esides in the

conclusion that rising superphosphate prices are obviously reflected in the

maintainance of higher prices for nixed fertilizer.

Since the farner still

depends upon supj:ly and denand to fix the prices of his farra produce, in spite
of the Agricultural ^djustnent Administration, prices for fertilizer T'hich are

possibly highor than supply and denand vjould v;arrant, tend to work a hardship
upon the farming class.
Fertilizer is obviously not the only connudity pur-

chased by the farner vrhich is priced at a higher level than supply and denand

rould p.ssibly

T.'arrunt.

There are other

coi-ji.icdities v/hich

far outstrip fer-

tilizer in being pegged at artificial levels.

The degree to vrhich superphosphate costs tond to keep the price of
fertiliztir constant rhan it should drop, or tend to make the price of fertilizer

rise rhen it should remain constant, is probably not very serious.

coiumodity involved is the kind of a gjods

But \/hen the

such as fertilizer -- which is alis entirely dependent upon

most rh.;lly purchased by the type of

consuifier r:ho

supply and demand for his return on his produce, then any rigidity in fertilizer
prices rill tend to cut sales of fertilizer.
Trhen

In the period

;>f

industrial crisis,

industrial :7age-earnors lack the purchasing po'.sr to absorb farm produce

and the fsr'a prices start tumbling, any element of rigidity in fertilizer prices

becjmes a serious natter.

-59-

CHAPTER V
PRODUCTION, LABOR
.lND

COSTS

-60CIIaPTEK

V
.uTD

PRODUCTION, L:iBOR
Miirylfmd
^'uid

COSTS

United States Prodtic^ijn

Table 18 gives an analysis of the fertilizer production in Maryland

and in the United Str.tes.
T.iBLS 18

PIiOJUOVlOW OF FEKTILIZER

In Thousands of Short Tons

i^inds o

.'

Fertilizer

19<,3

1925
600 25 710 50

1927

1929
51S
-

L931

1933

1935
393
-

Cocplete (Md.)
.-irnmoniited (Lid.)

Superphosyh?ites.:.(I-Id .

438 45 528
76

63b
1 579 43

407
-

308
-

*.ai Other

(lid.)

M.irylend Total

1,087

1,385
4,926 132 2,639 532 8,229

1,259

654 36 1,208

539 26 972
4 ,545
-

544 28 880

482
59

934
4,202
-

Complete (U.S.)
iUnr_ionir;ted

(U.S.) Superphosphates (U.S) *Lil Other (U.S)

United St-ites Total

4,033 190 2,458 945 7,G2o

5,088
75

5,992
-

5,274
-

2,435 525 8,125

ji.cid

2,551
797 9,320

1 ,968

1,545
377 5,197

455
6;,963

1,755 503 6,460

All Other^" includes I'ish Scrrip, Potnsh

Phosphate, Bone Meal and others.

It T/ill he noted

th-;.t

fertilizer is broken

dov/n into

four general

categories:

complete mixed fertilizer, annoniated fertilizer materials, superoti'.^^r

phosphates, and all

aiHTiioniated

fertilizer materials.

It nill also be noted that

fertilizer laaterials dropped out of production in about 1927.

Importance of Superphosphates in Maryland

The sarae data presented in Table 18 are
nov/ (.^iven

in ]jercentages in

Table 19 belov; vrhich indicate the relative importance of uach of the particular
kinds of fertilizer produced in the Maryland fertilizer industry and in the

United States industry.

61T.^BLIi:

19

PRODUCTION
In Per Cent

Kinds of Fertilizer

Ivld.-

1923 U.S
529 2.5 32.2 12.4 100.0

19ii7

Md.

U,S<....

1951 Md. U.S.,

^1.9
66.2

Md.

1935 U.S.
65.0

Complete
ijnnoniated

Superphosphates *..ll Others Total

*".':,.ll

40^3 4*1 48*6 ?.0 100.0

50.5 0,1
46 iO

3.4 100.0

62.6 0.9 30.0 6.5 100.0

42.1
51.8 6.3 100.0

55,4 2.7 100.0

28.3 6,5 100.0

Pjon e

27.2 7.8 100.0

Others," includes Fi sh S crap, Potash .icid Phosp hate,

Meal and others.

J.,

conparison of the Maryland production of fertilizer and the United

States production of fertilizer indicates that the Maryland production is

T.'eighted

dorn v/ith an unusually large

ai'iiount

of superphosphates.
46fi^

In no year

has tne liaryland superphosphate tonnage been less than

of the total fer-

tilizer tonnage produced in the State.

Moreover, the Maryland superphosphate

tonnage has run up as high as 61^ of the total fertilizer tonnage in the State.
The United States figures show a I'eversal of this state of affairs.
In no one year has the United States superphosphate production been greater than
'6Z\2!fo

of the total nation;il fertilizer tonnage.

In short, the Maryland fertilizer

industry has ulr/ays produced a greater proportion of superphosphates than the

national industry has.

Since

v-e

knov; that

the production of superphosphates is

the backbone of the fertilizer industry, the preponderance of superphosphate

production in Maryland is of great importance.

The production of complete mixed fertilizers, vhich is less than the

production of superphosphates in Maryland, indicates that the Maryland industry

enjoys a comparative stability not found in the fertilizer
states.

industries of other

There is no other state in the country \;ith a fertilizer industry v<ithshc-.'s

in its border, I'hich

so large a preponderance of superphosphate production

shov; a

as does

r/laryland-*

Most of the other states

huge amount of complete mixed

v-l-

.,

-62-

fertilizer tonnage, rather than superphosphates.

Complete mixed fertilizer plants are easy to set up, and easy to
close dovn.
To become a mixed fertilizer producer, one needs a concrete nixer,

some shovels, and a little credit to purchase fertilizer materials.

Such

firms, as contrasted vrith the superphosphate producers, have comparatively

little stability and in the bad years tend to close dorm.

The Maryland in-

dustry

shovjs a

preponderance of those factors in the fertilizer industry which

tend to give comparative stability through periods of industrial and agricult-

ural depression.

Table 20 indicates the per cent of the national fertilizer production,

which is manufact\n-ed in Maryland.

Table 20
Mi-LRYLi'tND

In Per Cent of uational Tonnage in Each Category

Kinds of Fertilize^r
Complete
.omnoniated Super and concentrated

192 5

1925'

1927 12.5 1.3

1929

1951
9.0

1955

1955

10.8 25.7 21.5 8.0 14.25

12.2 18.9
26.9 9.4 16.85

8.6

9.4

9.4

phosphates *;J.l Other Total

*"-'.ll

25.8 8.2 15.50

25.8 4.5 15.00

27.4 5.7 15.95

55.2 7.4 16.95

27.5 11.7 14.5

Other," includes Fish Scrap, Potash /.cid Phosphate, Bone Meal, and others .

Maryland has never manufactured less than one-fifth of the national

superphosphate production, and in one year the Maryland production was some7'hat

over one-third of the total superphosphate production.

ji.s

had been

pointed out in an earlier chapter, Maryland is the largest superphosphate producer in the United States.

Recovery in Fertilizer Production

Table 21 indicates the index numbers for the production of various
types of fertilizer in Maryland and in the United States, using the 1929 tonnage

-63-

as equal to one hmidred.

T.J3LE 21

h-SKTILIZER IITOUSTRY

rRODUCTIOK
1929
-

100

ilinds of Fertilizer

1923
84-. 6

1925

1927

1929

1931
78.6 75.9
-

1933
59.5 54.6
-

1955 75.9 70.1

-

Complete (I.Id.) Complete (U.S.)

.jnmoni at e d
(lid.)

67.3
-

115.3 02.2
-

122.8 84.9
-

100.0 100.0
-

-jnmoniated (U.S.)

Superphosphates (IJd.) Superphosphates (U.S.) *11 Others (Hd.) *.A1 Others (U.S.) Maryland Total United States Total

80.7 97.1 211.1 118.6 90.0 01.8

108.6 104.3 138.9

:>6.8

88.

96.2 119.4
65.9 104.2 87.2
ji.cid

114.7 80.3

100.0 100.0 100.0 100.0 100.0 100.0

82.4 77.8 72.2 57.1 60.5 74.8

85.2 61.1 77.8 47.3 72.8 55.7

73.7 69.3 163.9 63.1 77.3 69.3

*"-ai other," includes Fish Scr'ap, Post a sh

Phosphate, Bone Meal and others.

In every catei^ory of fertilizer material produced, the Maryland production shov/ed

a smaller decline during the depression than the United States production
sho'7;ed,

and the Maryland industry recovered from the depression lev faster than the fer-

tilizer industry as a ^vhole.

For exaraple, in 1935 the production of complete

-./as

mixed fertilizer in Maryland

75.9

of the 1929 tonnage.

The United States

complete fertilizer tonnage in 1935

T;as .only

7u.l)o of the 1929

production.

The

same state of affairs is found in the important category of superphosphate production.

The superphosphate tonnage produced in Maryland in 1935 was 73.7% of

the 1929 production, whereas the United States superphosphate production in

1935 T%3 only 69. 3^^ of the 1929 level.

Moreover, since the United States

figure for 1935 includes the high Maryland production, it would seem that the

superphosphate production outside of Maryland tecovered evun less than the

mtional

fi.nxros indicitc.

-54-

High Average annual Wage In Maryland

The importance of these facts is fairly obvious.

Since

vre

knov/

that superphosph.'-.te is probably the most inportant "base goods" of the fertilizer
industry, the production of so large
.in

amount as is found in Maryland, tends

to give stability to the Maryland fertilizer industry.

is not limited to

Moreover, such stability

maintainance of production levels, but must also be enlarged

to include comparative stability of employment

viz.,

somev/hc.t

less seasonal.

Since suparphosphato- is produced more or less :11 year round, employment in such
plants is not quite
plants.
-is

seasonal in

ch'

racter as is the

e .ployment

in dry mix

The

fc'.ct

th-jt

the employment offered by superphosphate plants is on

the \;hole less seasonal than employment in dry mix plants is responsible for the
fact th\t the second highest average ;aimual
T.'ago

per vago-earnor in the entire

fertilizer industry is

p..iti

in Maryland,

The state in which the fertilizer inper ,'age-earner is California.

dustry pays the highest average a.nnual

v/age

But since the clim.ate of that state is such that the usual planting seasons, as

found in the east and middle west, are unduely prolonged, the result is that
the dry rix plants in California (there are practically no other kind) tend to

offer unusually steady emplo^Taent.

But the California situation is certainly

not typical and may for our purposes be disregarded.

Table 22 and Exhibit 4 present the data for the total number of
fertilizer eraployijes in the leading fertilizer producing states.
Viith the

exception of

tv-'o

years

1927 and 1931 -- Maryland has alv/ays had the largest

number of employees in the industry.

The sporadic rises and falls in the

number of fertilizer v/age-earuers in the various states are mainly due to sudden
openim^s and closings of dry
pass out tne
n'dino

ni,v

plants which are born virtually over night and

v,ay.

65
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rH (D in en

to CO

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CO CO CO

03 C> 00 ^ 03 eg to in c^ 03 rt to CM

O O O

LO LO t> rH ai 03 CO CO J' <T> in

rH OJ rH

CV!

rH rH

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CV3
^^<

03

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st'

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tj<

CV!

v:t*

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c/j

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til

CTi

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a;

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in (> 7> to in 03 02 03 in t^i to '71 '. n en a> en

C7>

to in [> G> rH CO in CV3 CVJ CVJ CO lO CO en O" en cT* oi rH rH rH rH rH rH rH

CO OJ en rH

in o-> OJ CVl 03 o> Ti c) rH rH rH

rH CO in to CO CO en ejj c7> rH rH rH

t)

-67-

Wage Kates and Earnings

Table 23 and Exhibit 5 present the average annual wage per wageearner in the fertilizer industry, according to the Census reports.

While the

data in Table 25 tend sonewhat to exaggerate the average annual earnings, never-

theless the comparative picture presented by the data is valuable.

lis

is evident from that Table the highest average annual

t;

age in the

coiintry in 1935 uas paid in California, but ve

may disregard that figure.

Of

all the states in the north and in the east, Maryland paid the highest average

annual rage

S909 in 19S5.

This fact is of great interest since the Maryland

annual ^age seans to be higher than any of the Northern states

Massachusetts,

New Jersey, or Pennsylvania.

The average annual income in the fertilizer inf^52S in 1935.

dustry for the United States, was

fore 44.7 per cent
hij'-her

The Maryland figure was thereIt is also interesting to

than the national average.

note from Table 23 and Exhibit 5 that Maryland's annual vage per wage-earner
has rjcovered much faster from the depression bottom of 1933 than any oth^r stats in the Union,
^^s

has already been indicated the higher average annual

income per "age earner in Maryland is due to the comparative lack of seasonal

operation in the fertilizer industry in

It can oe maintair.ed,

Mr'.ryland.

of course, thit the high average annual wage

paid to

-;

v/age

earner in the Maryland fertilizer industry is not duo to the

comparatively steady onploynent offered by the superphosphate plants, but is

roally due to th. unusually high
rrage

rates paid in Maryland.

That belief is

erroneous and the facts indicate that the Maryland wage rates for fertilizer

employees

ai-e i.iid:7ay

between the high northern rates and

vie

tiie

low southern rates.

In investif^ating the facts about wage rales

can limit ourselves to

If ve lump to-

the wages paid in fertilizer establishments to common labor.

gether all coniaon labor in the oulphui'io acid, the superphosphate and the dry
'

mix plants, re find that

cornxion

labor represents about 67,6 per cent of ail raan-

00
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-70-

hours worked in the industry/.

That fact is based upon a survey of labor

statistics made by the National Fertilizer Association in connection v;ith its

application for a code in 1933.

Wage Rates in Sulphuric Acid Departments

If 6V.6 per cent of all the man-hours vrorked in the industry repre-

sents the

v.'ork

of coinraon labor, then the wage rates paid to conmion labor are

very inportant.

An examination of

v/age

rotes paid to conmon labor in the various

xvill

fertilizer establishments throughout the country

soon indicate xvhether unTable

usually high wage rates have been and are being paid in Maryland, or not.

24 gives the average hourly wage rates for various classifications of labor in

the sulphuric acid departments of fertilizer plants in the important producing

states.

The highest hourly rate for common labor in sulphuric acid departments
of fertilizer plants is t)aid in Ohio

41szf

per hour, vith Massachuseets close

behind with 40.1??

t)er

hour.

The Table indicates a fairly steady gradation in

wage rates as

v;e

travel from north to south.

Hourly

vrage

rates drop from

Massachusetts' 40. Ij^, through Maryland's 23. 9?^, to the low level in Georgia,

whore common labor in sulphuric acid departraents is paid 14. l^^ per hour and the
lowest level, Alabama and Florida (west of tho Appalachicola River) vjhere it is

paid

14?^

per hour.
The hourly wage rates in the various other classifications given in

Table 24 indicate the sane general gradation, althouprh the spread is by no means
as groat,

since highly skilled labor is not as easy to procure as common labor.

Wage Rates in Superphosphate Departments

Tablo 25 presents the average

v/age

rates paid in various classifications

of labor In suo^rphosphate departments of fertilizer plants.

As was evidont in

the sulphuric acid departments, tho general gradation in hourly wago rates paid

VI-

TABLE
SUlPIiUlilC
AI'EP. -GE.
'

:'A

aCID

?L,^J'JG

.jyS R..TES ?_-ID j'OH V.J^IuUS CL.1SSIFIC..TIONS

DEP.JRTIvZin 'TS

OF L:SOE
Iv:OI\"THS

IN THE SULPHURIC ..CID

BY

ST...TES

FOR

TliE

8IX

El^'DFD

June 30, 1933. (x)

(Ce..ts

Per Hour)

;ate

Acid Maker
73.1 00.0 86.9
56.2 46.8 47.8 47.4 44.9

Assistant ACid Maker

50.0

Eurnermen
42.0
^

Charnbermen

Comraon Labor

Mcssachusetts New York (except Long Island) New Jersey Pennsylvania

I.Ii^RYIuA'D

34.7 40.0 47.8

40.1 32.0 34.6

23.9 21.0 14.3 15.8 14.1

48.0
-

38.0

45.1
-

Virginia North Carolina South Carolina Georgia Florida (all east and south of counties of Suvfanee, Columbia, Lafayette & Taylor) Alabama and Florida (vest of Apalachicola River) Mississippi Louisiana Texas Tennessee
Ohio Illinois

22.5
-

29.4 23.8 19.9 16.5 16.9

40.4 3S.2 23.5 23.4 18.6

54.0

35.0

22.3

22.3

18.3

43,8 40.0
82.0 61.8 65.1 73.7 76.5

15.8

16.8 14.5 17.5 27.8 18.6

28.0 22.5
-

19.6 16.6 20.0 35.0 15.3 38.8 31.5 57.0

14.0
-

16.1
-

15.0

41.0 19.9
-

Michigan
California

;orthern Area Southern Area Midwestern Ai ea Pacific Coast Area

67.2 51.6 68.5

-

45.9 21.2
-

31.7 19.0 24.4

-

39.8
23.0..

26.0 16.5

United States

57.6

S6.0

21.9

29.6

22.2

(1)

Compiled from 363 reports made to the national Fertilizer Association.

-72-

TABLE

126

LUPTKPHOSPILiTE PLAINS

IN THE SUPERPHOSPiLJrE

AVERAGE TiAGE R-.TES P.alD FOR V.^KIOUS CL..CSIFia.TIONS OF ;L'J30R DEP^iETl'/Oa-JTS BY STi.TES FOR THE SIX I/iONTIiS EDTOSD June 30, 1933.(1)
(Gents Per Hour)

State

Millers
40.0 39.2 34.7 31.0 37.5 19.0 23,4 15.1 16.3

Mixers
33.1 39.0 34.5 33.0 29.9
19.6 19.5 17,6 16.7

Den Labor Common Labor

Massachusetts New York (except Long Island) New Jersey Pennsylvania

MARYL.iND

37.4 35.7 31.7

-

36.9 18.7 15,8 15.3 15.5

29.2 30.6 31.6 25.0 25.0

Virginia North Carolina South Carolina Georgia Florida (.^11 east and south of counties of Guwanee, Columbia, Lafayette & Taylor) Alabama and Florida (V/est of ^ippalachicola River) Mississippi Louisiana Texas Tennessee
Ohio
Ill.lnois

15.0 14.3 14.1 12,6

22.8
17.0 14.7 17.7 20.4 17.5

28.3 13.5 16.0 20.6 20.8 19.3 31.9 29.5 25.3 27.5 40.7

18.0 15.1 12.2 17.4 20.8 19.5

29.7 25.9
23. t>

28.6 10.4 11.9 18.1 20.2 17.3

28.8 25.2
2ft.

33.7 31.3
25. -S

Indiana Kentucky
Michig^;n

25.0 44.8
36.7 18.8 33.7

30,3
.32.9

25.1 36.0
25.7 13.9 27.3
19.6

Northern Area Southern ijrea Midwestern iirea

30.9 18.7 31.7

24.1

34.3 16.2 29.5

20.2

United States

26.2

(1)

Compiled from 363 reports

im;.de

to

Th'j N.'itional

Fertilizer ..saociation.

73-

T.^BLE 26

rey mixil'g

pl. jrrs

SIMvLJcY OF FERTILIZER II.DUSTKY V^vGE RiiTES FOR COIvMON L-^BOR (LOiiDING ;iND

SHIPPING) IN

I3RY

MIXING

DEP.iRTD.IEOTS -

iJX TYPES OF PKJJTS(l)

Number

State

of

Reports

Spring Season 1933 Average Hourly Rate(2) Cents

Maine Massachusetts Connscticut and Long Island New York (except Long Island) Naw Jersey
Delav/are

4 4
7

11
5

Pennsylvania
l/;.--?,YL.J'TD

12 30
29 42 26 50

Virginia North Carolina South Carolina Georgia Florida (zill east and south of counties of Suwanee, Columbia, Lafayette and Taylor ^ilataama and Florida (All X'-est of Apalachicol River Mississippi
yixkansas

28.2 31.6 28.5 31.8 30.3 16.1 26.7 20.7 15.6 13.2 12.4 11.5

19
27
7

18.3
11,.5
11,.7

13,.5
17..8

Louisiana
Texas* Tennessee and 'Kentucky Ohio Indiana Illinois
i.4ichigan

9 7

16..9 16..3 25,.7 26.,2

19
9 5 3

Missouri and V/isconsin Kansas, Iov;a and 1,'innesota California and V/r^shin^^ton
Totil United States
(1)

4
3

11

24.,5 33..3 31.,1 38.,3 35.,9

363

16.8

Compiled from 363 reports made to The N'ltiohil l^'ertilizer ..lisociation.

(2)

Weigh tfcd average equr.ls rates puid by each manufncturor multiplied by "number of miin-hours worked."

-74-

for

cortEion Ir.bor

in suporphosphato plants rune from north to south, v;ith

t.'gII

Michigc-ji

and New Jersey stnnding

at the head

'-Jith Z&<^

and 31.

S?'

respectively,

Maryl-Jid near the middlo v;ith

259^

an hour,

and Alabama nnd Florida (all v/est of

the Apalachicola River) at the bottom with 10.49f per hour.

The various other

categories of labor in the superphosphate departments in the various states show

the same general gradation..

Wage Rates in Dry Mix Departments

Table 26 gives the
xvage

rates for

co-iinon

labor in dry mix departments

of fertilizer plants in the various states.

Since virtually all the labor in

the dry mix plants is done by common labor, there is no necessity for recording

any other classifications in the dry mix departments.

As we have seen earlier

the tendency seems to be for the very highest rates to be paid in the northern

and middle western states.

Since the middle western states do not enter into

vie

competition they moy be temporarily disregarded, except in so far as

ln.tor

shall

consider producers shipping fertilizer into the west.

Hoviever,

of the

important states the highest hourly wage rates for common labor in the dry mix
dep-:rtments are paid in New York, 31. 8?' per hour, and in Massachusetts, 31.
6(^

per hour.

This table indicates the same general gradation from the north down
20.7(jf

to the south, with Mr.ryland at

per hour, and the lowest wage rates in

Georgia, Alabama and Florida (all west of the Appnlachicola River) at 11. 5(^

per hour.

As is evident fr^^m the last throe tables the hourly wage rates in

Maryland follow pretty closely the geographic position of that state.

As a rule

the vmgc rates paid in Maryland arc about midway between those prid in Massa-

chusetts and New York, rnd those

Appal' ohi cola River.

pr id in

Alabama nnd Floridr, (all west of the

The summary Table 27, rnd Exhibit

illustrnta this quite v;ell.

In r.inost every category, and ospecially in the important category of common labor,

75

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/2
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-76-

Maryland

vrage

rates fall some?There between the high northern rates and the
The fact which ve have noted in Table 23 that Maryland

lo" southern rates.

fertilizer eniployees earn the highest average annual income in the entire
east can only be attributed therefore to the fact that on the whole, the

Maryland industry is conparatively less seasonal and offers more stable employment.
This fact is borne out v;hen
v;e

remember that Maryland is the greatest

superphosphate producer in the United States, and that over 50 per cent of the

Maryland fertilizer tonnage is in superphosphate, vmile less than 30 per cent

of the United States fertilizer tonnage is in superphosphate.

Labor Costs in Production

The element of total cost which is allocated for direct labor in the

fertilizer industry, is quite small.

The cost of direct labor in the production

of a ton of nixed fertilizer ranges from $2.85 per ton in the Nev; England States
to ct.76 per ton in the Southeastern States

South Carolina and Georgia.

This

variation in labor cost follows closely the data we have given on the hourly

wage rate paid in various sections of the country.

efficiency in the
i'Tew

Notwithstanding the greater

England and Middle i^tlantic States in producing fertilizer

due in the main to greater mechanization of pla.nts

the direct labor cost

in these Northern and Middle ^-.tlantic producing areas ia highest.

f.

Raw Material Costs

Following the some trend, the cost of all materials including bags,
tT'ine,

ink and printin;^, is also hij^hest in the Northeastern states.

This is

due in the main to tne fact that the raw materials -- mainly superphosphate

must be shipped from the Middle ^'.tlantic states to the New England States where
it is mixed and bagged.

The extra transportation and labor handling costs force

;;^23.53

the IJew England States to pay on the average

for the raw material enter-

ing into a ton of mixed fertilizer, as compared with ^12. 91 which is paid by the.

-77-

Table 2V
SUI-lLi?.Y

OF Y:EIGKT3D A\rSLlAGE \;AGE RaTES PAID FOR VARIOUS CLASSIFICATIONS OF LABOR IN THE FERTILIZER IT^tduSTRY DURING THE SIX MONTHS EITOSD JUix^E 30, 1923.(2)
(By Areas)
(6) (3) (4)
l\/lARYiJUxD

North Cents
per Hour
IvIAlJUFACTURING SULPHURIC ACID:

Cents per Hour

56.2 45.1 29.4 40,4 23.9

South Cents per Hour

51.6 21.2 19.0 23.0 15.5

(5) \..estern

Cents per Hour

Pacific Coast Cents per Hour

-

United States
Cents per
Ho\ir

Acid Makers Assistant Acid Makers

Burnernieii

Chanbermen Gomnioii Labor

I;L=ii;UFACTURING

57.2 45.9 31.7 39.8 26.0

:

68.5
-

24.4 39.6 39.7

57.6 36.0 21.9 29.6 22.2

SUPERPKOSPH;lTE

Millers Mixers Den Labor GoTiTnon Labor

MAi:UFACTL^IlIG DRY Mi:3D

36.7 30.9 34.3 2&.7

37.5 29.9 36.9 25.0

18.8 18.7 16.2 13.9

33.7 31.7 29.5 27.3

26.2 24.1 20.2 19.6

FERTILIZERS: C-ang Foremen Scalemen Bag Loaders and Sewers Corrnaon Labor
'GHfSIvI:

47

32.9 28.8 26.5 26.5

49.0

(7) (V)
(7)

20.7
(7)

38.7 21.4 15.6 13.7 20.2 38.8

50.2 30.2 28.2 27.0 27.8

49.9

53.7 43.1 39.9 35.9 32.0

42.5 25.7 19.1 16.8

(7)

48.3

42.9

(1) TJeighted

by number of man-hours worked multiplied by the average rate paid by each manufacturer reporting. Compiled from 353 reports made to The National Fertilizer Association.
The Northern area comprises wiaine, New Hampshire, Vermont, Massachusetts, Connecticut, Rhode Island, New York, Pennsylvania, Now Jersey, Maryland (except the Eastern Shore), Newcastle County of Delaware, District of Columbia, and v/est Virginia.

(i)
(3)

(4)

The Southern area comprises Kent and Sussex Coimties of Delaware, the Eastern Shore of I;:aryland, Virginia, North Carolina, South Cc.rolina, Georgia, Florida, Mississippi, >irkansas, Louisiana, Oklahoma, Texas, and Tennessee.
The Midwestern area comprises Ohio, Illinois, Indiana, Kentucky, Missouri, Kansas, Nebraska, South Dakota, North Dakota, Colorado, New Mexico, ij?izona, VJyoming, MTyntana, Michigan, Vasconsin, Minnesota, and Iowa.

(5)

(5)

The Pacific Coast area comprises V/ushington, Oregon, California, Idaho, Nevada, and Utah,
Date not avail-ible.

(7)

-78-

Middle ..tlantic States for the raw naterial in every ton of their nixed fertilizer.

The Middle .Atlantic States have the lovrest

rav/

material cost in the

country, for the obvious reason, that the greatest superphosphate production
in the country is found in that area.
liS

a result of this huge saving in rav;

material cost on the part of the Middle i.tlantic States, the cost of producing
a ton of mixed fertilizer is 019.22,

the lowest in the country, whereas the

New England States produce a ton of fertilizer at the average cost of $35.62. The data are given in Table 28.

Cost in Percentages

The sane data are broken doi;n on a percentage basis and given in

Table 29.

Of the total cost of production, direct labor in the New England

f

States t^kes 8 per cent

the highest in the country, whereas the Southeastern

States, South Carolina and Georgia, pay 3.3 per cent of the total cost, to

labor
The cost of
raT7

materials, on a percentage basis is highest in the

South Central States, ^aabama, Mississippi, jVrkansns, Louisiana, and Texas.

Raw materi-ris loon high in percent in these states, becasue of the fact that
most of the other costs are very low, and since these states import most of
their
nv-i-

naterir.ls from other states,

these Ititter

ravj

materials stand out

as the biggest fr-ctor.

On the percentage basis, the hi^;hest total factory cost is found in

the South ..tl'intic States

Virginia, South of James River, and North Carolina.

The highest selling cost on a percentage basis is found in the State of Florida,
"^here 10 per cunt of the cost of

production is allocated towards selling ex-

pense.

Florida, being fairly distant from the main consuming areas, finds it
The lowest selling expense on the

quite expensive to sell its fertilizer.

priTo<intr.iie

basis, is found in the South Atlantic States, Virginia, South of

Jaraes

River, and North Carolina, v/here only 4.8 per cent of the total cost

-79-

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(D

to

a w
,

W ^'^
.

-d "d 'd -H q lii^U

[>

rH

oa

CO

'}'

in to

-81-

of proiuction is

allocated for selling expc-nse.

It v;ill be recognized that

the Virginia imd ilorth Carolina producers are virtually next door neighbors
to their consuu'ers.

The second lovvest percentage cosu can be found in the

South Central St'.tes, vhere only 5.1 per cent of the total cost goes for selling expense,
in
^il-ibaraa,

as in the case of the South Atlantic States, the dry nix plants

Mississippi, ;Lrkansas, Louisiana, and Texas are

iraraedi::tely

adja-

cent to their consuri.;rs.

Cheapest Producers
The only conclusion v;hich can possibly be dra-n fron Tables 28 and
29 is xhat the cheapest producers ore in the Middle .itlautiG States v/ith the

Southaastorn States close behind.

The gap betneen the cost in the Middle

(;;j22.79

..tlantic States (^19.22 per ton) and the Southeastern States

per ton)

is soon closed v-hen the element of final transportation cost is introduced.

The narket therefore in

^-^hich

the Middle ^:.tlantic States have the best chances,

is mainly the 'nev England States and the Middle V.'estern States.

An examination

of Table 26 indicates that Florida has the second highest cost in the country,

but

t.ie

recent growth of superphosphate plants in Florida

rav;

-nill

tend to bring

dcTi the

material cost there.

The study of Table 29 indicates that the

The main

cost of direct labor is not very much of a competitive factor.

elenent of cost is obviously the cost of raw materials, which is not less
than 6c. 1 per cent of the total cost of production anywhere in the country.

CH.JTER VI
PLU-JT FOOD
TI<:EInDS .-lND r&'J<YL;j>JD

-83-

CiLJTSR VI
Vl^in: FO..D TRENDS .JJD I1lRYL..]S1D

Plant Food
jis

has been indicated in earlier chapters, coroiiercial fertilizer con-

tains nitroijen, available phosphoric acid (superphosphates), potash, and filler.

The materials in the fertilizer vhich are of benefit to the farraer are the nitrogen, the phosphoric acid and the potash; these eleraents are usually designated
as "plant-food," in contradistinction to the filler, v/hich is usually of in-

different value to the farner.

Cost
Df

Filler

The basic cost

;f

fertilizers to the farner is conposed entirely of

such items as bags, hauling and freight all of rhich have to be met v/hether

nuch or little plant food is present in the nixed fertilizer.

These basic costs

are the sane for a ton of filler as they are for a tun of high grade fertilizer and they constitute an important part of the delivered price of fertilizer. The

values of these basic costs ?ere worked out fr.jm the price schedules of manu-

facturers filed uith the

Iffi^i

Code ..uthority for each state involved in a 1934

shov;

study on prices.

These basic costs

what the farner actually paid for filler

and are given in the Table below.

T.aBLE 30
^'.IL.T
;

F.M'HHS P.iID FOK FILL'Ii IN MirJCD FERTILIZSH Year Ended Jupe 30, 1934

"' ^

Per Ton of Fert i lizer

.iLlabana

Total
;;

y;1.69

Florida Virginia Mississippi South Carolina Georgia Kjrth Carolina Seven Southern States
(1)
"V/hat

1.65 1.85 2.30 2.39 2.46 2.53 2.21

36^,189 525,348 426,579 240,907 1,057,970 1,126,697 1,742,537 5,482,227

,

Corr;rnerciy!l

The ;^outhern Far.-.ier Payn for The Filler iu His Fertilizer," A.L. MeLrin;? Fertilizer Yearbook, 1936.

-84-

From the figures just cited, it is evident that the southern farraer
paid in the 1954 season .$2.21 for the filler in
tfc^

average ton of fertilizer.

"For this he appears to have received about 20 pounds of ground phosphate rock
y:orth,

at retail,

about 11 cents, about 55 pounds of dolomite

.rth 25 cents,

and about 500 pounds of other material, mostly sand and v'orth practically
nothing.
The total cost to the planters in these seven states f ^r filler was
VtTisn

$5,482,000 in 1953-4.

from this is deducted the value of the included

dolomite, limestone, phosphate rock, etc., at retail prices, a balance remains

of $4,568,000, rhich is approximately the amount paid by planters in these

states for -northless filler in the 1934 season." (^)

Since the basic costs paid by the cunsumer for bags, hauling and
freight, are the
fojd,
it is
sarae vihether

the fertilizer contains much or little plant

evidently in the interest of the consumer therefore, to buy the

most concentrated fertilizer consistent vdth his needs.

Nearly all of the

southern states have already passed laws prohibiting the sale of fertilizer

mixtures containing less than a certain minimum of total plant food.

these
laT.'s

Some of

were passed years ago when conditions were very different and they

established minima of 11 and 12 per cent, which mean practically nothing at

present.

Mixtures containing less than 16 per cent of plant food are generally
The

uneconomic at present, and are likely to become more so in the future.

sale of such goods is already prohibited in Alabiuaa, Mississippi, and a nuraber

of other states.

Trend of Plant Food Content

The trend of plant food content in mixed fertilizer over the last
tT70

decadbs would seen to indicate that more and more farmers are becoming

acquainted with the logic of such facts as have just been pointed out, and are

purchasing fertilizar containing more plant-food

(1) Mohring, Loc.

th-.n

they used to.

cit.

-85-

TABLE 31
Tin V^SlOHT^iD
A"(72BAGE PL.iiJT-FOOD CONTEl^lT

OF

r.Ii:<SD

FERTILIZERS^"'"^

CONSm'ED IN TnE UNITED STATES BY YEARS

Per Cent Plant -Food

Year
1920
in Complete Fertilizer Mixtures

13.9

1925
1925
1927

16.0

16.5
16.6 17.0 17.5

1928
19k;9

1930 1931 1932

17.8
17.9 18.0

1933
19;34

18.0 18.1

However, the movement tov/ard greater percentages of plant food in

mixed fertilizer is not entirely due to demand for such percentages by the
farmer.
In a grer^t many v/ays it is also due to the fact that economic conditions

have compelled the manufacturer of mixed fertilizers to use ingredients of higher

plant food content.
It is fairly impossible to make mixtures containing 12 or

14 per cent of plant food from materials all of which contain 16 or more per
cent, unlcaa of course,

sand or cheap filler

vra.s

added to the formula or required

fertilizer materials.

But as is evident from the last table, there is a slow

drift a^;ay from the diluted mixed fertilizers, to do the more highly concentrated

varieties.

The follov;ing table illustrates in some detail, the shift from smaller

percentages of plant food in fertilizer to more highly concentrated varieties.

(1)

"A Survey of T'lant Food Consurription in the United States," by A. L. Mohring, nnd H. R. Smnlley. Proceedinp.s of the Eleventh Annual Convention of the National Fertilizer AasoTiation. p. 200.

-86-

TA3LE 32
co::sm'3'TioN of mi::ed fertilizers in tiie uijited states AGGORDIiJG TO THE TOTJiL PLaI^tv.jqqq GUaRAlJTSSD^ "^^

Total Plant-Food (iHPgOg+KgO;

In Pel' Cent

Year
1930 1931 1932 1933 1934

Tons(2)

Under 14
1.98 2.12 1.10
.89 .56

14-15.9
26.22
29 .
^Sl

16-17.9
35 .'5 6

18-19.9
8.50 8.61 6.81 8.07 7.91

20-21.9
17.86 19.44 22.41 20.12 23.27

22 And Over

Total
100.00 100.00 100.00 100.00 100.00

1,328,840 965,522 599,246 739,772 860,805

31.28 6.18 3.76

30.54 29.19 58.33 56.43

9.89 10.67 9.42 6.41 8.08

As is evident, fertilizers containing less than 16 per cent plant food

have been dropping out of

tJie

picture,

v/iiile

the fertilizer containing at least

come in

16 per cant plant food and ranging up to 21.9 per cent, has on the ;;hole,

to replace the

lov;

content fertilizer.

Fertilizer and the Agricultural Adjustment Adninistration

T/hat is

probably of some importance in this connection is the fact that

the shift from low content fertilizer to high content fertilizer was especially-

narked in 1933 -- the year

ilien the

Agricultural Adjustment Act

T.ont into effect.

What presumably happened was the purchase of better grade fertilizer by the
farmer to be used on that part of his acreage v/hich was not removed from culti-

vation of certain crops such as cotton, corn, wheat, tobacco, etc.

It is un-

doubtedly true, as has bewn maintained by the National Fertilizer Association,

that tho Agricultural Adjustment Administration program has increased the pros-

perity of the farmer, and the cotton farmer in particular, and has made it possible
for him to purchase
i.'iorw

fertilizer.

There is of course, the other side of the ctory, namely, that the increased price of cotton
du-;

to

x)i^

Agricultur-al Adjustment Adrainistration program

is driving .'jaericbn cotton out of foreign markets and is encouraging othor cotton
(1) I.!chring and Craall.^y, loc. cit., p. 187. (2) For tiiose statca only for vhich figures v-ere available for all five years.

-87coiintries to ixicrsase their acreage.

This increased foreign production of

cotton will mean increased future conpetition for the United States cotton in

foreijn markets.

Either the cotton acreage and production in this country will

have to be still further reduced, hence on the whole requiring less fertilizer
or else we shall have to have a more decided trend toward the very cheapest

possible cost of production.

point
v.'ould

It is not clear whether the answer to the latter

be cotton on fewer acres with more fertilizer per acre, or cotton on

more acres with less fertilizer per acre.

Then again, mechanical cotton pickers,

if found practical, would reduce the production cost of cotton very markedly and

might perhaps right the position of American cotton in foreign markets.

Another interesting slant on the effect of the Agricultural Adjustment

Administration program on the fertilizer industry is contained in the releases

of the Bureau of the Census of Agriculture showing that in the south a very

decided decrease in cotton acreage has been largely taken up in increased

acreage of food stuffs and food crops, accompanied by substantial increases in
livestock.
Thus in 1934 in North Carolina, there was an increase of 900,000

acres of corn and hay; 150,000 acres more wheat; 217,000 more cattle and
108,000 more hogs.

For Alabama, the data indicates 1,000,000 additional acres

of corn to replace cotton; 450,000 more acres of hay, and 440,000 more cattle,
jiHd so

on throughout the south.

One of the important reasons for the small use of fertilizer in many
of the V/estern states is found in the fact that much livestock is carried and

hence there are available large quantities of manure.

it

Under the circumstances,

may bb reasonable to expect similar developments in those southern states

which under the Agricultural Adjustment Administration program substituted food

crops -for cotton acreage, with the expectation that the food crops will be used
for cattle
f:nd

hos feed.

If this sort of development in the south becomes per-

manent, it miy have some deleterious effects upon the fertilizer industry.

But

such effects will not becomo evident for at least a decade, if then.

-88-

Plnnt Food Trend and Superphosphate

The significance of the aforegoing facts us far as Maryland is
concerned, may become more pointed v/hen we rememher that Maryland is the

larger superphosphate producer in the United States.

If the trend tovrard great

it can-

percant-iges of plant-food in fertilizer continues at its present rate,

not help but

in more
',';ays

h'--ve

very beneficial effect upon the Maryland fertilizer industry

than one.
in the long run more pla.nt food means more superphos-

To begin v-ith,

phate.

The emphasis on pl-uit food cannot but serve as a stimulus to the

Maryland industry since approximately one-third of the nation's superphosphate

is produced in Maryl'ind.

Interestingly enough, in spite of the increased

amount of plant food in mixed fertilizer in recent years, the proportion of

available phosphoric acid in mixed fertilizer has not increased as have the

proportions of nitrogen and potash.

For example the folloY>ring data on plant

food content of mixed fertilizers presents the paradox:

TiJ3LE 35

Year
1929 1934

Nitrogen
S.l 3.6

Phosphoric ^.cid
9.8 9.E

Potash
4.6 b.3

Total
17.5 18.1

It will be noted that vrhile the amount of plant food per ton of mixed

fertilizer in the United States increased from 17.5 per cent in 1929 to 18.1
por cent in 1934, nevertheless the amount of available phosphoric acid
(

super-

phosphates) decreased from 9.8 per cent to 9.2 per cent.

That decrease would

seem to upsut the theory that Maryland

-.vill

derive benefits from an increase

in the plant food content of the average mixed fertilizer.

Price Doclino of Plant Food Units

However, there ia only one explanation for the failure during the last few years avQilablo phosphoric acid (superphosphate) to keep pace with the steady

-89-

growth of oth3r plant food entering into mixed fertilizers.

price.

The explanation is

The following table tells the story:

TxlBLE 54

PIiHCEr?AGE DECREASE IN A^/ERAQE RETAIL PRICE PER UllIT OF PluilW FOOD IN ViiRious fertilizers! 1)

Nitrogen in
Sulphate

Price decrease from 1929 through 1954 (in per cent)

Nitrate of Soda
-40

of
/jnnonia'

-o6

Dried Blood -38

Available PpOg in Superphosphate

-4

KgO in Muriate of Potash

-22

With the price of

a unit of

available phosphoric acid in 1954 merely

4 per cent off the pre-depression 1929 level, and all other plant food from

22 to 40 per cent off the 1929 level,

it is fairly evident that superphosphates

would not enjoy the same increase in use as had the other types of plant food.
The paradox is therefore resolved:

with the drift toward greater

plant food content in mixed fertilizers we should expect a comparative growth

in the use of superphosphate; but this has not been the case.

The reason for

the lag has been the comparative inelasticity in the price of superphosphate,

discussed earlier and indicated in this chapter.

That such inelasticity can

become serious business can be quickly seen when it is remembered that the
fertilizer consuiaer -- the farmer

is almost entii'oly dependent upon the

elastic qualities of supply and demand for his prices.

Notv/ithstanding the

.igricultural adjustment Aiirainistration program and recent governrnental price

pegging of cotton, droughts, depressions and overproduction are limiting factors,

and foreign competition in foreign markets is not a negligible factor either.

More Plant Food Means More Superphosphate

We
m-jy

therefore conclude h^/pothetic-ruly that hif-her pl.-mt food content

in the average mixed fertilizer means more superphosphate production and greater
(1) A'l-.pted from:

"The Extent to VJhich Oh.;mical Research Has'LjWerjd tJiO COst Of Fertilizers to Consuraers Since 1860" by A.L. Mehring and Lola S. Doming, p. 2. Th^; AT:erlc^-.n Fertilizer, U'-:tober 51, 1956.

.84871

-90-

use of phosphoric acid, if the price is right.

Recent senatorial rumblings

concerning the necessity of using the Tennessee Valley Authority projects to

produce phosphates at a "yardstick" price will probably have some effect, if

not immediately, then the near future. In the meantime, vath the farmer's market

becoming steadier because of greater purchasing po\;er in the hands of many reemployed urban consumers, the comparative inelasticity of the price of super-

phosphate is not as grave a natter as it will be, if maintained through the

next dip in the business cycle.
On the whole,
vie

may expect some grovth in the

percentage of available phosphoric acid (superphosphates) in mixed fertilizer

for the next few years because of the rising farm market and more money flowing into the farmer's pocket.

Beyond that, even the most optiraibtic souls would

make no predictions.

Plant Food and Relocation of Plants

A second result of increased plant food consumption

upon the possible relocation of fertilizer plants.

is its effect

During the last decade

many Maryland firms had been buying up dry mix plants in southern states and
permitting their Maryland dry nix plants to close.
This obviously was the re-

sult of declining farm income and increased competition for the farmer's dollar.

Instead of shipping bagged mixed fertilizer dovm to the south, the Maryland

producer found it cheaper to ship "base goods" and add filler and bag the finished pro iuct in one of his dry mix plants in the south*
In that way freight

and hauling charges on filler could be avoided, although personal investigation

among Maryland producers has indicated that the type of labor available in many
of the southern dry nix pl.-nts is comparatively inefficient.
But since we have

seen that labor cost is usually too small to be a computitive factor, except in
a

very tight r^rket, the Maryland producer could overlook the relative ineffic-

iency of his southern labor.

-91HoT/ever,

many of the Maryl'ind producers who had spread their dry mix

plunts with profusion throu.,hout the south, many found after the industrial
collapse of
19.29,

that it

T7as

cheaper to pay carrying charges on one or two

large dry mix plants at home than to carry a dozen small ones far afield.
V/ith the

unshakable optimism that "Prosperity is just around the corner," such

producers retained their far flung plants as long as they were able, and some
even longer, v^hich resulted in a crop of financial reorganizations among Maryland fertilizer producers,

a few Maryland producers who had set up one or two

dry mix plants at strategic points in the south, found the agricultural crisis
quite a strain, but prjbably no more of a financial strain than if they had

stayed at home.
However, the movement, such as it was, affected merely some of the

Maryland dry mix plants and practically none of the superphosphate departments,
which constitute the backbone of the Maryland fertilizer industry.
With the

prevailing tendency in the direction of greater plant food content in mixed

fertilizer, and with probably the same groYrth in the use of superphosphates
at least while the agricultural "prosperity" lasts

there ?dll probably be

less of a tendency to move dry mix plants to points adjacent to consumers, than

heretofore.

Since there vill be less filler included in the bagged fertilizer,

there will be less necessity to save rm the freight and hauling for such ship-

ments and the relative inefficiency of labor will be weighed more carefully.
Of course, there ~ill be some intrepid souls who will play the game all over
again, spreading their dry mix plants over the consuming area with a financial

abandon characteristic of the tventies.

ventures are
v/ise or

Only time will toll whether such ad-

otherwise.

But the Last debacle is not so far behind that

"The memory lingers on".

it nay bo forgotten;
l^Iaryland

to paraphrase the popular s;.ying:

producers are now very cautious about opening up dry mix plants through-

out the south.

-92-

Maryland Competitive Position

.inother result of more cjncentrated fertilizers is that it will

enable Maryland superpla isphate manufacturers to maintain their competitive

position to even a greater advantage than heretofore.

As we have seen in

Chapter V, the cheapest fertilizer producers are found in the Middle iitlantic
States of vhich Maryland is by far the largest producer of superphosphates.
If the trend is towards more concentrated fertilizers, then nixed fertilizers

will contain less filler

:ind

more plant food, and it is the cost of producing

If Maryland is a low

the latter which the major part of the production cust

cost producer, as it is, then that competitive advantage will be heightened

by the fact that

r-.ore

of the plant-food and less filler v;ill be used and that

the present day differences in cost betv/een Maryland and other productive

centers will probably be increased.

-93-

CH..PTSR VII

CONCLUSIONS

-94-

CILJ^Tm VII
OOIJCLUSIONS
1.

Th3 Leading fertilizer producing state is Maryland, its production

usually varying frjm 13 to 17 per cent of the national fertilizer tonnage.

2.
Tlie

leading superphosphate producing state is Maryland, its super-

phosphate production varying fr..n 20 to 35 per cent of the national superphosphate tonnage,
i-^s

a result of this huge production of superphosphates, which

are manufactured all year round, enployraent in the Maryl.-md fertilizer industry
tends on the average to be soraev;hat less seasonal than elsewhere.
3.

In every category of fertilizer material produced, Maryland

production, when compared with the United States production, shov/ed a smaller

decline during the depression and a faster recovery from the depression than
the national fertilizer industry did.
4.

Of all the import-:int fertilizer producing st-:tes, Maryland paid

In the entire

the highest average annual wage per employee in the industry.

United States, Maryland was second only to California which is a very minor
fertilizer producing center.
But Maryland pays a higher average annual wage

than any fertilizer producing state in the North, East, or South,

5.

The fact that the Maryland fertilizer Industry pays an average

annual wage higher than that paid by any other important producing or competing
state,
is not due to high hourly wage rates in Maryland.

The hourly wage rates The high average

in the Maryland fertilizer industry are not particularly high.

annual wage is due to the fact that the Maryland industry produces an unusual
!i:a5unt

of superphosphates.

Since the ^jroduction of superphosphate takes place

all year rjund rather than only in seasonal peaks, the Maryland fertilizer
anyloyecj is given (on the veragu)
'sleev/herfc,
sonov/h.'it

moro steady work than employees

as is evident in Exhibits 7 and 8.

P>,

The element of direct labor cost in the fertilizer industry is

>

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o ^ ^

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}-i^

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rD
h(Q ir

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ul
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-97-

quite small, ranging on the average in Maryland, trou about

the total cost of production.

6 to

per cent of
to about

On the other hand, raw naterials

It is evident therefore,

ai.iount

66 per cent of the cost of production.

that labor

cost is a very snail competitive factor.

7.

Maryland is one of the

fev,'

states in the

lor;

cost producing area.

In fact, the cost of production of fertilizer in Maryland is, on the average,

probably among the very lo"est.

8.

The trend over the past few years tov/ards the production of more

highly concentrated fertilizers cannot but have a very favorable ei'fect upon
the Maryland industry since the industry here produces such huge amounts of

superphosphates.

However, the sole drav/back is the fact that the price of

superphosphates has not fallen quite enough to be in line with nitrogen producing materials and potash

the other important plant foods.

Comparative

price inelasticity on the part of superphosphates has somev/hat retarded the use
of superphosphates.

The use of superphosphates has not increased v/hile the use

The obvious difficulty was the failure of superphosAt the present

of other plant foods has.

phates to decrease sufficiently in price during the depression.

moment, with agricultural "prosperity" more or less here, and other plant foods

rising in price, the inelasticity of superphosphate prices will probably not be

of any importanc*; if the prices remain constant.

The next dip in the business

cycle, however, might hit the superphosphate producer quite hard if the sarae

comparative rigidity of prices is maintained.

9.

The trend towards more highly concentrated fertilizers may put a

stop to the practice of some Maryland fertilizer producers of buying up dry mix

plants throughout the south and cJos ing their Maryland dry nix plants.

Since

more hirh^Y concentrated fertilizer contains less filler than the ordinary
variety of fertilizer, less freight and hauling charges are wasted on such
filler when highly concentrated fertilizer is shipped.
V/ith less

freight

' -98-

charges to be spent on valueless filler, the necessity that dry mix plants be

adjacent to tueir consumers will no longer hold, or

v.ill

certainly be far less

pressing.
IC. Finally,

the trend towards nore concsntrated fertilizers will

enable the Maryland producers to maintain their competitive position to even

a greater advantage than heretofore,

since the competition is really in the

V/ith

cost of producing the plant food v/hich enters into the fertilizer.

more
s

plant food being utilized in each ton of fertilizer, the Maryland producers

should be able to widen their competitive Gdvmtage on

lovr

cost production.