USDA fertilizer investment takes aim at farm costs and concentration
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The US Department of Agriculture has selected 8 fertilizer manufacturing projects to move forward under its new FIELDS program, backed by about $573 million in proposed federal funding.
With private investment included, the projects add up to more than $1.34 billion. The USDA says they could deliver about 1.08 million tons of annual fertilizer production and capacity across the US.
The announcement, made Oct. 22, targets one of the biggest costs on any farm. Fertilizer prices feed directly into what growers spend to raise crops, and from there into the cost of food further down the chain.
These selections are not final awards. The USDA said the projects have been selected to move forward in the FIELDS funding process, so amounts and timelines could still change.
A concentrated market is the problem the USDA wants to solve
FIELDS, short for Fertilizer Investment & Expansion for Long-Term Domestic Supply, is a $500 million program run by USDA Rural Development. It draws on Commodity Credit Corporation authority and redirects unused money from earlier projects under the Fertilizer Production Expansion Program that did not go ahead.
The USDA frames the program around market concentration. According to the department, 4 companies control about 77% of North American nitrogen fertilizer capacity. Phosphate is even more concentrated, with 2 companies accounting for more than 90% of capacity, and 2 companies produce about 90% of North America’s potash.
That leaves farmers with few suppliers to choose from and exposed when supply tightens. Agriculture Secretary Brooke Rollins summed up the administration’s view: “Farm security is national security.”
The projects range from potash to dairy manure
Between them, the 8 selections cover a wide mix of products and technologies, from new facilities and plant upgrades to modular units and waste-based fertilizer.
The largest proposed grant, about $139 million, goes to Intrepid Potash for a new facility near Carlsbad, New Mexico. It is designed to produce about 220,000 tons a year of sulfate of potash. PCI Nitrogen is in line for about $100 million to modernize sites in Pasadena, Texas, and St. Helens, Oregon, which produce ammonium sulfate and urea.
TalusAg plans 20 modular units across 11 sites in 7 states, producing about 130,000 tons a year of anhydrous ammonia. Smaller, distributed plants like these could put production closer to the farms that use it.
Agriculture Project Holdco has been selected for about $116.9 million for projects in Lewis, Kansas, and Fair Oaks, Indiana, that would turn dairy manure into liquid ammonium nitrate. True Organic Products plans to make fertilizer from agricultural byproducts at sites in California, Oregon, and Arizona.
In Bartow, Florida, Peace Valley has been selected for about $19.9 million toward a $50.6 million project producing about 250,000 tons a year of nitrogen, phosphorus, potassium, and sulfur products. AdvanSix is in line for about $47.4 million to expand anhydrous ammonia output in Hopewell, Virginia, by about 84,000 tons a year. SUL4R-PLUS Illinois has been selected for about $34.9 million for a sulfur fertilizer plant in Marissa, Illinois, designed to make about 100,000 tons a year.
Most of the projects pair federal money with an equal or larger private share. Across the 8 selections, the USDA would fund well under half of the total cost, with companies and their investors covering the rest.
Lower prices are a projection, not a promise
According to the department’s own economic analysis, once the projects are operating, nitrogen fertilizer prices could fall about 4.4% and potash prices about 5.3%. It also projects domestic nitrogen production rising about 3.7% and potash production by nearly 40%.
Those figures are estimates. They depend on the projects being financed, built, and running, and new fertilizer plants can take years to reach full output. The federal money is also still proposed rather than awarded.
For growers and food manufacturers, the program is a signal of direction more than an immediate change in costs. Washington wants more of the fertilizer used on US farms made in the US, and it is willing to put public money behind new entrants.
Whether 8 projects totaling about 1.08 million tons a year can shift prices in a market dominated by a few large producers is still an open question. How quickly will the first plants come online, and how will the established producers respond?
Source:
US Department of Agriculture
