Fertilizer Relief: USDA unveils initiative to lower fertilizer prices

With planting season underway, U.S. producers continue to face rising fertilizer costs, which recently prompted the Trump administration to roll out an initiative aimed at increasing domestic fertilizer production and easing supply chain disruptions.

On April 29, U.S. Secretary of Agriculture Brooke Rollins held a press conference in Washington, D.C. with cabinet officials and other lawmakers to create a plan to increase access to fertilizer and lower prices. 

“This is an all-of-government approach, and obviously, as a Reagan conservative, I cringe a little bit about saying, ‘The government is here to help you.’ But this is an instance where there is a massive gap in the market, and the national security implications of this are real,” she stated.

Industry officials report the announcement follows a recent multi-week fertilizer price surge amid ongoing conflict in Iran and the Strait of Hormuz – a major shipping route for fertilizer.

According to DTN’s weekly Retail Fertilizer Trends report, anhydrous ammonia prices climbed above $1,100 per ton at the end of April when the U.S. Department of Agriculture’s (USDA) announcement was made, roughly 30 percent higher than prices recorded at the end of February.

A focus on domestic production 

During the press conference, Rollins announced there are some projects already in the works which could increase domestic nitrogen fertilizer capacity by 30 percent in the next one to two years, domestic potash production by more than 100 percent and domestic phosphate production by 200 percent.

“This is real-world change for our farmers and ranchers and for our American rural communities,” Rollins stated.

She also highlighted several short-term measures which have already been implemented, including an extension of the Jones Act waiver allowing fertilizer to move more freely between U.S. ports. The waiver, she said, has already been used for anhydrous ammonia shipments.

Further, the administration temporarily waived restrictions on fertilizer imports from Venezuela, and Rollins said pending shipments of urea and sulfur could help close nearly 57 percent of the nation’s projected April-to-June urea supply gap.

In addition, fertilizer manufacturer CF Industries delayed maintenance at its ammonia facility in Donaldsonville, La. to allow the company to produce an additional 100,000 tons of granular urea during the current planting season.

In other comments made during the press conference, U.S. Secretary of Commerce Howard Lutnick noted the administration plans to invest more than $1 billion in infrastructure assistance to support domestic fertilizer projects.

“We’re going to invest in domestic fertilizer manufacturing,” Lutnick said. “So, if we can strengthen our domestic supply chains, our investment accelerator will create more manufacturing domestically. We’re also making sure we cut red tape so we can build and do it quickly, and we can provide the relief our farmers need to make sure they’re feeding America.”

U.S. Secretary of the Interior Doug Burgum noted the administration is also prioritizing faster permitting for mining projects tied to potash and other critical minerals.

“I think everybody knows we have a permitting problem,” Burgum said. “We’re in a position where our supply chains are too dependent on others – China in particular – controlling not only minerals but the processing as well.”

Concerns about the supply chain 

While industry analysts believe USDA’s announcement is a step in the right direction, they also warn fertilizer markets will likely remain volatile for the foreseeable future.

In an April 30 RFD News article, Fertilizer Economist Josh Linville of StoneX explained restoring global fertilizer supplies will take time, even if shipping routes reopen quickly.

“Think about this on the global scale. If the strait opens tomorrow, we’ve first got to convince all of these vessels it’s safe to set sail, and that’s going to take a minute,” Linville said.

“Second, think about some of the attacks we’ve seen. Qatar and Iran both had some of their gas plants destroyed by missile and drone attacks. Both of those nations’ attacks were centered on the plants that feed their nitrogen production facilities, so now we’re talking about repairs. This also takes a while,” Linville continued. “Once we get that going, we’ve got to get liquified natural gas production back up and running, and once that starts getting to the fertilizer plant, we’ve got to restart the fertilizer.”

Midwest Market Solutions Grain Trader Brian Hoops emphasized the belief the conflict in Iran will not end soon, which will keep energy prices high and may add inflationary pressure on the ag industry.

USDA Deputy Secretary Stephen Vaden also said the administration is examining fertilizer market concentration, noting two companies currently control roughly 90 percent of key fertilizer inputs.

Vaden pointed out both the U.S. Department of Justice and Federal Trade Commission are investigating fertilizer market practices.

“It’s public knowledge they are investigating the fertilizer markets,” Vaden said. “They are issuing questions to these companies, they are examining their business practices and we need farmers to share the information they have about what they are hearing from their own fertilizer dealers with us.”

Producers feel

the pressure

According to USDA Economic Research Service data, fertilizer accounted for 33 to 44 percent of corn operating costs and 34 to 45 percent of wheat operating costs since 2020, and in a recent American Farm Bureau Federation (AFBF) survey, 70 percent of the more than 5,700 farmers surveyed from across the nation reported they cannot afford all of the fertilizer they need this year.

With this, AFBF Economist Dr. Faith Parum said the administration’s focus on expanding domestic production is encouraging but will likely not provide immediate relief.

“We think it’s a great step, but it’s going to take a few years for some of the new production facilities to come online,” Parum told RFD News. “It’s not going to do much to stabilize prices in the short term, but we’re hoping we’ll have a stronger supply chain for the next geopolitical crisis.”

Parum also noted upcoming USDA commodity cost and return forecasts should provide a clearer picture of how rising fuel and fertilizer prices may affect producers’ profitability this year.

“This will be the first USDA data looking at cost per acre since the crisis in Iran started, so we’ll see how fuel and fertilizer prices have increased per acre and it will give us a good look at what profitability will look like in the coming year,” she said.

Hannah Bugas is the managing editor of the Wyoming Livestock Roundup. Send comments on this article to roundup@wylr.net.