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The handwriting is on the wall

Written by Bill Streeter on .

MFA stops selling ammonium nitrate on Jan. 1

After months of internal deliberations, MFA Incorporated’s management has decided to transition away from ammonium nitrate at company-owned MFA Agri Services Centers. Why? Discussions took into account expected regulations from governmental agencies and expected mandates from insurance companies for those businesses deciding to continue selling ammonium nitrate.
One thing became very clear in the discussions. There comes a time when it’s important to recognize the right moment to transition away from a product or practice. That transition can be painful.

Some customers could be upset. Why? Farmers and ranchers have used ammonium nitrate for years. They trust it and like the results. MFA has sold the product for more than half a century.

At the same time, in terms of ammonium nitrate, the handwriting is on the wall. Right now MFA can make the transition on its terms, rather than wait for mandates dictated by outside officials on their terms and timetable. This is the right time and the right decision.

To handle ammonium nitrate in an approved manner going forward, MFA would have to retrofit existing facilities, close many existing facilities and build replacement facilities.

Could MFA do that successfully? A qualified yes. Could MFA do so profitability? Doubtful. It would all depend on what’s coming down the pike from regulators and insurance companies—two very interested segments of the industry. If the product winds up being banned or restricted beyond profitability, all the expense and effort would have been for nothing.

Figuring into the decision are new products, like Agrotain, Super U and others, which offer producers good agronomic replacements for ammonium nitrate. These new products are effective, safe and economical. That factored heavily in the decision.

As MFA’s head of agronomy, Dr. Jason Weirich, points out, “Research shows you can obtain yields equivalent to crops grown with ammonium nitrate by using urea treated with Agrotain as a nitrogen source.”

When these new nitrogen stabilizers began to hit the market, nitrate use began fading in much of MFA’s trade territory. The fall in use continues to steepen. System-wide at MFA, the declining use of ammonium nitrate has been more than offset by a steady increase in nitrogen stabilizers. MFA handles almost exactly half the volume of ammonium nitrate today as it did just 10 years ago.

Efforts by national agricultural organizations to which MFA subscribes and participates have been proactive in an ongoing effort to keep the market open for ammonium nitrate. Those of us at MFA appreciate and applaud those efforts. However, transitioning away from ammonium nitrate is the right move for MFA.

Ammonium nitrate will either be under such intense scrutiny that no one will be able to profitably offer it or it will be officially eliminated. Think of the organophosphates and other agricultural tools that have been squeezed by regulations or subject to official bans.

MFA did not make this decision lightly. And MFA is not alone in this decision. Many other agricultural cooperatives and companies are following suit.

MFA began producing ammonium nitrate after World War II when MFA converted old munitions factories that easily converted into peacetime plant foods production facilities. The infrastructure was there and available. And MFA members and customers needed the products.

Why were these factories so easy to convert to plant foods manufacturing? Because they were designed to produce explosives. And with absolute certainty, ammonium nitrate is an explosive, a very potent one at that. Those characteristics draw the focus of regulators and insurance companies.

For those reasons, both regulators and insurance companies are rightly concerned, especially after the horrific accident in West Texas in 2013.

MFA executives have thoroughly discussed the situation with MFA’s risk management team, with MFA’s plant foods wholesale arm, retail managers, MFA’s agronomy team and with MFA’s board of directors. All agreed it is the right thing to do and the right time to make that decision.

MFA Incorporated will no longer sell ammonium nitrate as of Jan. 1, 2015. Current inventories should be depleted by that date.

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