The U.S. Department of Agriculture (USDA) is announcing it will support additional fertilizer production for American farmers to address rising costs, including the impact of Putin’s price hike on farmers, and spur competition. 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, 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 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.
Details on the application process will be announced in the summer of 2022, with the first awards expected before the end of 2022.
Under the Biden-Harris Administration, USDA is engaged in a whole-of-government effort to combat the climate crisis and conserve and protect our nation’s lands, biodiversity and natural resources including our soil, air and water. Successfully meeting these challenges will require coordination and partnerships with stakeholders throughout the supply chain such as the planned investment in innovative domestic fertilizer production.
This effort is also part of the Biden-Harris Administration’s whole-of-government effort to promote competition, including in agricultural markets. 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.
“Concentrated market structures and potentially anticompetitive practices leave America’s farmers, businesses, and consumers facing higher costs, fewer choices and less control about where to buy and sell, and reduced innovation—ultimately making it harder for those who grow our food to survive,” said Secretary Vilsack. “As I talk to farmers, ranchers and agriculture and food companies about the recent market challenges, I hear significant concerns about whether large companies along the supply chain are taking advantage of the situation by increasing profits—not just responding to supply and demand or passing along the costs.”
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
USDA touches the lives of all Americans each day in so many positive ways. In the Biden-Harris Administration, USDA is transforming America’s food system with a greater focus on more resilient local and regional food production, fairer markets for all producers, ensuring access to safe, healthy and nutritious food in all communities, building new markets and streams of income for farmers and producers using climate smart food and forestry practices, making historic investments in infrastructure and clean energy capabilities in rural America, and committing to equity across the Department by removing systemic barriers and building a workforce more representative of America.