USDA Announces New Grants to Boost Domestic Fertilizer Production

The USDA recently announced that half a billion dollars in grants had been made available to increase the production of fertilizers domestically. This will be achieved through the Fertilizer Production Expansion Program, whose objective is to promote competition in agricultural markets. The department revealed that these funds would be made available through the Commodity Credit Corporation.

Tom Vilsack, secretary of the U.S. Department of Agriculture, stated that the department believed in the growth of local, innovative businesses shared and owned by individuals who could build opportunities, fill gaps and best serve the unique needs of their own communities.

Vilsack added that the recent disruptions observed in the supply chain had demonstrated how crucial it was to invest in the domestic agricultural supply chains. He remarked that the fertilizer expansion program was an example of the many initiatives introduced by the Biden-Harris administration to bring employment opportunities and production back to America, support domestic goods and services, and promote competition.

The Fertilizer Production Expansion Program will support the following:

• Production of fertilizers that are manufactured by firms that operate in the United States or its territories to create good-paying employment opportunities domestically while decreasing reliance on possible inconsistent and unstable foreign supplies.
• Production that is outside the orbit of dominant suppliers of fertilizer and independent, in an effort to grow competition.
• Production that is innovative and uses techniques that will improve methods of fertilizer production and help jumpstart next-generation fertilizers and nutrient fertilizers.
• Sustainable production that will help decrease the impact of greenhouse gases released during production and transportation, using renewable sources of energy and feedstocks.

In addition, the program will support farmer-focused fertilizer production, especially since it’s a Commodity Credit Corp investment.

Entities eligible for these funds include state or local governments, certified benefit corporations, producer‐owned cooperatives and corporations, tribes and tribal organizations and nonprofit entities, as well as for‐profit businesses and corporations.

The minimum funding can be awarded is $1 million while the maximum is $100 million. The term of any grant awarded is five years. The Department of Agriculture plans to start accepting applications soon through www.grants.gov. Every party will have up to two opportunities to submit their application for funding.

Applicants will have a 45-day window for applications to receive priority for projects that will increase phosphate, nitrogen or potash fertilizer availability, as well as nutrient alternatives for producers in the market to use in 2023 and 2024. The department will also provide an extended application window, which offers an additional 45 days, to receive applications for applicants who need more time to increase their capacity.

As these efforts yield tangible results, existing fertilizer companies such as Compass Minerals International Inc. (NYSE: CMP) will be under reduced pressure to meet the exploding demand.

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