Excerpt from prepared text of Steve Wilson, CF Industries president and CEO, presented at Agricultural Retailers Association annual meeting and expo in Dec., 2010.

Nitrogen Supply History ExplanationTwo keys to understanding how the North American fertilizer industry fits into the global picture are natural gas costs and domestic production capacity.

From 1996 to 2002, nearly 12 million tons of nitrogen fertilizer manufacturing capacity came on stream worldwide, even as global demand rose by only about 4 million tons. At the same time, U.S. producers faced higher natural gas costs than our overseas competitors due to tight supply caused in part by restrictions on offshore drilling. This had a devastating effect on the domestic nitrogen production industry.

As we progress along the timeline (1999 to 2005), you see how rising domestic natural gas costs precipitated a string of plant closures — a total of 25 plants closed over this time frame. As a result, U.S. ammonia production is now 42 percent lower than it was in 1999.

From 1990 to 2010, North America's share of total world nitrogen fertilizer production shrunk from 16 to 9 percent. Since demand in the U.S. grew modestly during this period, this trend made the U.S. more dependent on imports. At the same time, China's share of world production, for instance, grew from 18 to 32 percent.

After so much of the domestic production capacity shut down, the U.S. became, by necessity, the world's largest importer of nitrogen. Although fair competition from imports is healthy for the market, retailers and farmers clearly benefit from having a strong domestic producer industry with shorter lead times, lower risk of supply disruption and homegrown focus on the needs of domestic customers. Fortunately, industry conditions have improved significantly since 2005, and the remaining domestic nitrogen producers are strong and healthy.