Mar 11, 2022

USDA to incentivize more fertilizer options through new grant program

The USDA is adding a $250-million grant program to incentivize more fertilizer options for U.S. food producers.

The announcement from the USDA came March 11 in an effort to spur competition and add options in the fertilizer market in an effort to, what the department called, support “American farmers to address rising costs, including the impact of Putin’s price hike on farmers.”

Additionally, to address growing competition concerns in the agricultural supply chain, 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. “The planned investment is one example of many Biden-Harris Administration initiatives to bring production and jobs back to the United States, promote competition, and support American goods and services. As the President said (at the State of the Union), we are working to rebuild the economy towards resilience, security, and sustainability, and this support to provide domestic, sustainable and independent choices for fertilizer supplies is part of that effort. In addition to the jobs, lower costs and more reliable supply, increased investment in the domestic fertilizer industry will help address climate change by reducing the greenhouse gas emissions associated with transportation, while also fostering more sustainable production methods and more precise application.”

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 U.S. 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.

Details on the application process will be announced in the summer of 2022, with the first awards expected before the end of 2022.

As part of its efforts to enhance fair and competitive markets, 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, 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. The inquiry stems from the July 9, 2021, Executive Order on “Promoting Competition in the American Economy,” which created a White House Competition Council and directed federal agency actions to enhance fairness and competition across America’s economy.

USDA will seek information specifically on:

• Fertilizer.
• Seed and agricultural inputs, in particular as they relate to the intellectual property system.
• Retail, including access to retail through wholesale and distribution markets.

The comment period will be open for 60 days once the requests for information are published in the Federal Register, and upon which time comments can be submitted to www.regulations.gov. In the interim, the requests for information will be made available at www.ams.usda.gov/about-ams/fair-competitive/rfi.

USDA will use the comments received to develop reports mandated under the Competition E.O., and to develop policies relating to fair and competitive markets, supply chain resiliency, pandemic response, local and regional food systems, and other areas. Subsequent actions may range from new grant and loan programs to additional rules and regulations under the Packers and Stockyards Act of 1921 and other relevant laws to increase fairness and competition in American agricultural markets.

More information about this request for information is available at www.ams.usda.gov/about-ams/fair-competitive.