USDA plows US$250M into fertilizer production as buffer against food price hikes
14 Mar 2022 --- In a landmark effort to address steep food price hikes including those imposed by Russian president Vladimir Putin on farmers, the US Department of Agriculture (USDA) will make US$250 million available to support additional fertilizer production and spur competition. This move comes amid the continued Russian invasion of Ukraine.
Russia is one of the key producers of the top components of fertilizers and, with this funding, the US government wants more sustainable US fertilizer production.
This summer, the USDA will make the money available through a grant program to support independent fertilizer production by US farmers.
The department will launch a public inquiry for information regarding seeds and agricultural inputs, fertilizer, and retail markets in order to address growing competition concerns in the agricultural supply chain.
“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,” says Tom Vilsack, agriculture secretary.
Fertilizer prices have more than doubled since 2021 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.
Lowering costs and bolstering supply
The USDA will make funds available for fertilizer production by US farmers.
The US 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.
In addition to creating 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.
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 online.
Public inquiry
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. The effort is also part of the Biden-Harris Administration’s whole-of-government effort to promote competition, including in agricultural markets.
The comment period will be open for 60 days once the requests for information are published in the federal register.
The USDA will use the comments received to develop reports mandated under the Competition executive order (EO), and to develop policies relating to fair and competitive markets, supply chain resiliency, pandemic response, local and regional food systems, and other areas.
Edited by Inga de Jong
