USDA unveils a $500 million stimulus program for domestic fertilizer production

[October 11, 2022]  By Zeta Cross | The Center Square contributor

(The Center Square) – The Biden administration has announced $500 million in grant money to stimulate American-made fertilizer production.

Secretary of Agriculture Tom Vilsack unveiled the new grant program, called the Fertilizer Production Expansion Program, on Sept. 27.

Agronomist Emerson Nafziger, a crop specialist with the University of Illinois Extension for the past 36 years, said he was intrigued and surprised to hear the USDA announcement.

“Increase domestic production of fertilizer; that is not a phrase we have ever heard from the federal government,” Nafziger told The Center Square.

He is interested to hear what other agriculture policy watchers have to say about the effort.

“It’s pretty unusual for the government in the U.S. to try to manipulate supply for inputs like that,” Nafziger said.

Under the new program, grants will be used to support “independent, innovative and sustainable American fertilizer production” to supply American farmers. The goal is to expand the manufacturing and processing of fertilizer and nutrient alternatives in the U.S. and its territories.

“Recent supply chain disruptions have shown just how critical it is to invest in the agricultural supply chain here at home,” Vilsack said in an announcement of the program.

The Commodity Credit Corporation will provide the funding.

Prices for nitrogen, phosphorus and potassium fertilizers are significantly higher than they were a year ago, Nafziger said.

“It is a new world in terms of prices and availability of fertilizers in particular,” he said. “That is what people are thinking about this fall.”

Uncertainty on world markets and high natural gas prices caused fertilizer prices to peak in May. The Russian invasion of Ukraine was the prime driver of the price spikes.

According to the Commerce Department, the U.S. imported $262.6 million worth of urea ammonium nitrate fertilizers from Russia in 2021. The U.S. imported an additional $231.1 million in fertilizers from Trinidad and Tobago in 2021.

Prices for most fertilizers eased somewhat during the summer. Dealers have healthy supplies on hand. But some vendors are telling farmers the same thing this fall that they said last year: buy now because no one knows what the situation will be next spring.

“It’s a frustrating situation for individual farmers because they need to make an effort to see if they can get all the fertilizer that they need,” Nafziger said.

In spite of the fears last fall that fertilizers might be in short supply, most farmers were able to find what they needed this past spring.

Farmers who were willing to pay were able to buy the fertilizers that they wanted, Nafziger said.

“Most people got most of what they had hoped to get,” he said.

Nafziger is anxious to see how the USDA's $500 million grant program to stimulate more fertilizer production in the U.S. will play out.

“It really is interesting,” Nafziger said.

The United States has pretty good production capacity for ammonia, he said. A large plant was started up in eastern Iowa just a few years ago.