The U.S. Department of Agriculture is announcing it will support additional fertilizer production for American farmers to address rising costs, including the impact of Putin’s price increase on farmers, and spur competition.
The USDA will make available $250 million through a new grant program this summer to support independent, innovative, and sustainable American fertilizer production to supply American farmers. Additionally, to address growing competition concerns in the agricultural supply chain, the USDA will launch a public inquiry seeking information regarding seeds and agricultural inputs, fertilizer, and retail markets.
“Recent supply chain disruptions from the global pandemic to Putin’s unprovoked war against Ukraine have shown just how important it is to invest in this crucial link in the agricultural supply chain here at home,” said Agriculture Secretary Tom Vilsack.
Fertilizer prices have more than doubled since last year due to many factors including Putin’s price hike, a limited supply of the relevant minerals and high energy costs, high global demand and agricultural commodity prices, reliance on fertilizer imports, and lack of competition in the fertilizer industry.
The United States is a major importer and dependent on foreign fertilizer and is the second or third top importer for each of the three major components of fertilizer. The top producers of the major components of fertilizer include China, Russia, Canada and Morocco, with Belarus also providing a significant share of potash.
USDA will use funds from the Commodity Credit Corporation (CCC) set aside in September for market disruptions to develop a grant program that provides ‘gap’ financing to bring new, independent domestic production capacity on-line—similar to the recently announced meat and poultry grants that are designed to promote competition and resilience in that sector.
The new program will support fertilizer production that is:
- Independent — outside the dominant fertilizer suppliers, increasing competition in a concentrated market;
- Made in America — produced in the United States by domestic companies, creating good-paying jobs at home and reducing the reliance on potentially unstable or inconsistent foreign supplies;
- Innovative — improve upon fertilizer production methods to jump start the next generation of fertilizers;
- Sustainable — reduces the greenhouse gas impact of transportation, production, and use through renewable energy sources, feedstocks, formulations, and incentivizing greater precision in fertilizer use;
- Farmer-focused — like other Commodity Credit Corporation investments, a driving factor will be providing support and opportunities for U.S. agriculture commodity producers.
However, details on the application process won’t be announced until the summer of 2022, with the first awards expected before the end of 2022. Although this will not help current demands, the hope is to build a more stable system for the future.
As part of its efforts to enhance fair and competitive markets, the USDA is requesting comments and information from the public about the impacts of concentration and market power in fertilizer, seeds and other agricultural inputs, and retail. With these RFIs, the USDA is also seeking information on competition and market access for farmers and ranchers, new and growing market competitors, especially small and medium-sized enterprises, and more about the context for these markets for farmers.
USDA will seek information specifically on:
- Seed and agricultural inputs, in particular as they relate to the intellectual property system.
- Retail, including access to retail through wholesale and distribution markets.
More information about this request for information is available on the AMS website.