USDA to fund fertilizer production expansion

The US Department of Agriculture (USDA) is looking to support small-scale, distributed ammonia & fertilizer production in the US via a new funding program. The Fertilizer Production Expansion Fund aims to help US farmers secure access to cheap, lower-emissions fertilizer, as well as shielding the agricultural industry from price shocks. New & existing projects will be funded to spur competition, with the focus on smaller players – applicants must not hold a market share equal to or greater than fourth largest in the US (across a range of functions & nutrient products).

Applications remain open until the end of 2022 for federal support to projects that “significantly increase American-made fertilizer production to spur competition and combat price hikes”. The USDA is seeking to support fertilizer production projects that demonstrate the following aspects:

• Independent, and outside the orbit of dominant fertilizer suppliers. Because the program’s goal is to increase competition, market share restrictions apply.

• Made in America. Products must be produced by companies operating in the U.S. or its territories, to create good-paying jobs at home, and reduce the reliance on potentially unstable, inconsistent foreign supplies.

• Innovative. Techniques will improve fertilizer production methods and efficient-use technologies to jumpstart the next generation of fertilizers and nutrient alternatives.

• Sustainable. Ideally, products will reduce the greenhouse gas impact of transportation, production and use through renewable energy sources, feedstocks and formulations, incentivizing greater precision in fertilizer use.

• Farmer-focused. Like other Commodity Credit Corporation investments, a driving factor is providing support and opportunities for U.S. agricultural commodity producers.

Project aspects the USDA is looking to fund via a new grant program. From “Biden-Harris Administration Invites Applications for Grants Under the Fertilizer Production Expansion Program”, 30 Sept 2022

$500 million in total is on offer through the program, with a minimum grant of $1 million (max. $100 million) over a five year term. Grant funds can be used to cover a whole range of project costs:

• Construction of a new facility or purchase of an existing facility for purposes of expanding capacity or increasing output, including the purchase of land;
• Pre-development costs including, but not limited to, engineering and other professional fees;
• Working capital to support expanded capacity or increased outputs;
• Modernizing or expanding an existing facility, including expansion and modifications to existing buildings and construction of new buildings at existing facilities;
• Purchasing new, or modernizing existing processing and manufacturing equipment;
• Customizing, and installing equipment, devices, and technology that improves processing functions, worker conditions, or safety;
• Modernizing, customizing, and installing climate‐smart equipment that reduces greenhouse gas emissions, increases fertilizer use efficiency, improves air and water quality, or meets one or more of USDA’s climate action goals;
• Ensuring compliance with packaging and labeling requirements under applicable law (including sealing, packaging, boxing, labeling, conveying, and product moving equipment);
• Ensuring compliance with occupational and other safety requirements under applicable law;
• Engaging in workforce recruitment, training, apprenticeships, and retention to ensure expansion projects will be adequately staffed and crewed and offer opportunities to workers.

How grant funds may be used. From USDA Fertilizer Production Expansion Program Overview, 30 Sept 2022

The program sits alongside recent, significant policy developments in the US: funding for regional hydrogen hubs, a draft national hydrogen strategy, a $1 billion loan to Monolith Materials, funding for other significant ammonia energy projects, and – of course – the Inflation Reduction Act.