The U.S. Department of Agriculture will invest $500 million to increase domestic fertilizer production

The U.S. Department of Agriculture has stated that it will invest $500 million to expand domestic fertilizer output, tripling its previous pledge.

The federal funds would support long-term projects and ready-to-go proposals that may have an impact as early as the following year.

Some of the first projects to receive funding from the Fertilizer Production Expansion Program are expected to be fertilizer facilities that are currently under construction and might be completed more rapidly with a cash infusion, said U.S. Secretary of Agriculture Tom Vilsack on Tuesday.

“There are facilities that have been started or are under construction where opportunities may be advanced so that more product may be handled in 2023 or 2024,” he told reporters.

Vilsack indicated an unidentified facility in Michigan that may be eligible for the cash. The Michigan Potash & Salt Company was planned to begin building this year on a $1.1 billion facility to process potash mined in the state, and a company executive stated that the new government financing will help the long-awaited project move forward.

Potash, a potassium compound, is one of the most extensively utilized agricultural fertilizers. According to USDA data, the United States is not a big global producer of it. Canada, Russia, and Belarus have produced around two-thirds of the world’s total output.

Michigan Potash has stated that its factory will be able to entirely replace Russian imports of the fertilizer within three years, but full output is not anticipated until then.

The business did not reply immediately to a request for comment on this piece.

The federal support for fertilizer production is the result of a surge in expenses late in 2021 and early in 2022. According to an index of fertilizer prices compiled by Green Markets, these prices have decreased but are still around double what they were at the start of 2021.

The price hikes were caused by a number of issues, including natural gas shortages used to manufacture nitrogen fertilizers, limited fertilizer stockpiles, and production disruptions caused by a hurricane that devastated Louisiana in August 2021. The invasion of Ukraine by Russia aggravated the problem.

So, in March, the USDA established a new grant program to enhance domestic production with the intention of bolstering new, independent operations. The Biden administration has worked to reduce agricultural industry consolidation.

Vilsack stated that the USDA will shortly begin collecting grant applications for rewards ranging from $1 million to $100 million.

A first round of applications due within 45 days will focus on projects that have the potential to boost fertilizer supplies in 2023 and 2024. The second round of submissions due within 90 days will be for projects with a longer duration.

The awards will be administered by the Commodity Credit Corporation, which has historically sponsored farm bill loans, payments to farmers, and conservation projects. The USDA stated earlier this month that CCC funds would be used to support a $3 billion “climate smart” program. Vilsack stated at the time that the CCC has adequate funding to support the additional programs and meet its farm bill duties.

The fertilizer grant program is a component of a longer-term strategy to lower prices and the nation’s reliance on imported goods. The Biden administration has rejected proposals to reduce tariffs on specific fertilizers to alleviate recent high costs, arguing that the short-term gains do not outweigh the long-term trade objectives.

Vilsack stated that greater domestic fertilizer output along with improved strategies to prevent the overuse of fertilizers will assist in stabilizing supplies and farmer costs.

Regarding the new award program, he stated, “We’re excited.” We believe it will help cut costs, improve supply, and even create chances for farmer-owned cooperatives as well.

On October 4 and 6, the USDA will host online seminars to discuss the Fertilizer Production Expansion Program and how to apply, respectively.

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