The government will award up to $500 million in grants to increase domestic fertilizer production, said Agriculture Secretary Tom Vilsack on Tuesday at a meeting of state agriculture directors. Some of the money will go to projects that would pay off in 2023 or 2024.
“Recent supply chain disruptions have shown just how critical it is to invest in the agricultural supply chain here at home,” said Vilsack, referring to sharp increases in fertilizer prices that were compounded by the Russian invasion of Ukraine. The $500 million initiative was announced in May, when the Biden administration encouraged farmers to expand wheat production.
The USDA set a 45-day application window for projects that would increase the supply of nitrogen, phosphate or potash fertilizer or alternative nutrients for 2023 or 2024 crops. There will be a 90-day window for applications to significantly increase U.S. production and bring down prices. The Fertilizer Production Expansion Program was intended to support independent, innovative and sustainable production for U.S. farmers.
Russia is the world’s largest fertilizer exporter. The United States relies on Russia for a comparatively small share of its fertilizer supply but American farmers still feel the brunt of high prices worldwide.
Despite high prices, Iowa farmers ramped up fertilizer purchases in the year ending June 30 by 620,000 tons from the 4.65 million tonnes bought in 2021, “and most likely applied all of it,” reported the Cedar Rapids Gazette. “The 2022 sales are the highest Iowa has seen since at least fiscal 2014.”
High commodity prices, with the chance of large profits, make heavy use of fertilizer economically justifiable, said an Iowa State University economist.