Do USDA Fertilizer Grants Bump Supply?
DTN Finds USDA Fertilizer Grant Program Does Little to Boost Overall Production
OMAHA (DTN) -- Though USDA's March 10 announcement of $29 million in grants going to companies to expand fertilizer production in the U.S. came with much fanfare, a DTN analysis found the eight projects awarded as part of the Fertilizer Production Expansion Program will do little to expand overall production.
The program is designed to grow new production and foster competition in the U.S. fertilizer industry, all while making the nation's largest companies ineligible for the grants. It is part of the Biden administration's overall plan to expand competition in agriculture in general.
U.S. companies that could appreciably expand domestic fertilizer production to help grow supplies and affect prices for farmers are not among USDA's recent grant recipients.
Five companies account for about 87% of all North American fertilizer production including CF Industries Holdings, Inc., Nutrien Ltd., The Mosaic Co., Wilbur-Ellis Company LLC and Yara International ASA.
None of those companies is connected to any of the eight recipients.
By DTN's calculations, the eight USDA grants awarded will lead to the expansion of fertilizer production by just 406,400 tons per year, or just .02% of the 21 million metric tons produced in the U.S. in 2020.
Many of the grant recipients expect to produce compost and not commercial fertilizer.
There are two or three companies that received grants that may produce fertilizer for use in commercial or row-crop farming operations. The composting companies, however, are more likely to supply products to smaller vegetable operations than to row-crop farmers.
A two-page USDA fact sheet on the program states, "Eligible applicants -- including their affiliates -- must certify they do not hold a market share (in either manufacturing, processing, or distribution) greater than or equal to the entity that holds the fourth largest share of that market for the following nutrients or components: nitrogen, phosphate, potash, or any combination of the three."
In all, USDA said it selected 21 of more than 350 companies that applied for $3 billion in funds, then narrowed it down to eight companies in the first round.
DTN has filed a Freedom of Information Act request for a list of all companies that applied.
"I know that increased costs for fertilizer and other inputs have put a strain on farmers and cut into the bottom line," U.S. Secretary of Agriculture Tom Vilsack said in a news release making the announcement.
"The Biden-Harris Administration and USDA understand the importance of taking on the root causes and need to invest in the agricultural supply chain here at home to create a resilient, secure and sustainable economy for the long haul. By expanding the production of domestic fertilizer supplies, we can grow independent local businesses, bring production and jobs to rural communities and support fair prices for our farmers."
NOT MAKING CUT
Among the companies not making the cut was Texas-based PCI Nitrogen.
PCI Nitrogen is one of the largest ammonium sulfate producers in the country, https://ioccorp.com/…. The company had plans to build a liquid fertilizer production plant if awarded a USDA grant.
Also not receiving a grant was Boone, Iowa-based Landus Cooperative. The company had asked for assistance in building a state-of-the-art facility to manufacture and distribute chemical and seed products for Landus' 7,000 farmer owners.
Northwood, Iowa-based Progressive Ag Cooperative was not among the grant recipients.
Progressive Ag applied for funds to replace an "old" unused dry fertilizer elevator with a facility with the capacity to store 12,712 tons, according to USDA.
New Bedford, Massachusetts-based AMT Bioproducts Corp. applied for but did not receive a grant to build a 16,000-square-foot fertilizer production facility.
DTN has examined all of the grant recipients and provided descriptions of their plans.
Sylacauga, Alabama-based Pursell Agri-Tech LLC manufactures controlled-release fertilizers.
The company received a USDA grant for $4.99 million and this money will be used to assist the company with working capital to increase its inventory by 40,000 tons a year, according to USDA.
According to the company's website, https://fertilizer.com/…, the company features three main product lines. One focuses on controlled-release fertilizers for turf and ornamental, another line for specialty ag and a third line for row crops (corn, soybeans, wheat and cotton).
Because each ton of controlled-release fertilizer doubles the nutrient benefit of a ton of fertilizer, the project will make it possible for the company to increase its overall production by 40,000 tons, according to USDA. These funds could be used beginning in the spring of 2023 with farmers realizing the benefits of increased fertilizer availability almost immediately, USDA said.
ELM DIRT LLC
Grandview, Missouri-based Elm Dirt plans to use a $1.4 million USDA grant to expand to 456 metric tons (mt) of organic liquid fertilizer production per day or about 166,400 mt per year.
That is just .008% of total fertilizer production based on 2020 numbers (21 million metric tons), https://www.elmdirt.com/….
According to USDA, the grant will be used to expand production of organic microbe fertilizer from 8,000 gallons per week to 120,000 gallons per week. Products are based on worm castings which are created by worms breaking down organic waste into beneficial substances.
Products are a proprietary blend of microbes that include nitrogen-fixing microbes, phosphorus-solubilizing microbes and plant growth-promoting rhizobacteria.
Elm Dirt's products have a lower nitrogen, phosphorus and potassium rating than commercial fertilizer, so they help reduce nutrient losses, but still result in nutrients being readily available for plant uptake when two to five gallons an acre are applied twice per year.
Organic fertilizers comprised just 1% to 2% of the share of fertilizer sales in 2021.
TABLE TO FARM COMPOST
Table to Farm Compost LLC, of Durango, Colorado, will receive $2.6 million from the USDA. The company will use the grant to increase the production of locally produced compost for the region to support agricultural production between December 2022 and December 2027, according to USDA.
Table to Farm Compost LLC, https://tabletofarmcompost.com/…, has received permitting approval to build a commercial compost facility and will use the funds to purchase land and equipment to scale up production. In addition, transportation and processing equipment for carbon and nitrogen feedstock will be purchased.
Table to Farm Compost LLC will use the grant in the form of working capital for expansion and construction and installation of power.
A search of the website yielded how the company collects food scraps and other waste and the composting process. They sell living soil, or compost, which has nutrients in it but no commercial fertilizers.
OSTRA ST. LOUIS
Ostara, of St. Louis Missouri, received a $7.6 million grant from USDA to help finalize a facility that is expected to produce 200,000 tons per year of sustainable granular phosphate, https://ostara.com/….
According to USDA, the money will be used to fund a fertilizer manufacturing site in the late stages of project development, including construction, commissioning and production ramp-up of the site.
At capacity, the company plans to produce 200,000 tons per year of "sustainable phosphate fertilizer," according to USDA. "It is proven to drive superior crop yields, improved farmer economics, and reduced impacts on climate, surface and groundwater, and resource extraction," the agency said in a description.
The production will amount to .01% of total 2020 fertilizer use by farmers (21 million metric tons). The technology is able to reduce nutrients runoff, according to the company, by allowing farmers to use less. The company also has developed a nutrients-removal technology.
The project site includes an 18,000-square-foot building on 1.8 acres of land, with a 14,000-square-foot building extension underway. Ostara has a fertilizer storage and logistics terminal on site.
"The vast majority of raw materials and final product will be shipped to and from the site using barge and rail delivery, with approximately five truck deliveries and shipments per day expected at full capacity," USDA said.
Palindromes Inc., https://palindromesinc.com/…, of Unionville, Missouri, received a $4.9 million grant from USDA. According to the agency, the funds will be used to "expand anaerobic digestion and renewable energy-production system in a regionalized economy approach to the production, processing, and sale of climate-smart fertilizer and co-products. The project entails the conversion of wet organic wastes of animal manure, meat processing wastes and food wastes into dried organic fertilizers and soil amendments. Electricity co-product is generated from the biogases."
Details about the fertilizer volumes expected to be produced by Palindromes were unavailable.
"Our fertilizer-processing facility occupies 70 acres of land," according to a description of the project provided to USDA.
"The size of the project is 3 to 5 acres. Proposed funds will be used for increasing and expanding the manufacturing and processing of fertilizer and increasing its availability in the United States. With the USDA funds, we will purchase and construct two new fertilizer processing systems and two new anaerobic digestion systems."
BLACK EARTH COMPOST
Black Earth Compost LLC, of Gloucester, Massachusetts, is a full-service compost company receiving a $1.7 million grant from USDA.
The company, https://blackearthcompost.com/…, collects food scraps from residents, schools, supermarkets and colleges across eastern Massachusetts and Rhode Island and returns compost to their customers selling it in garden centers in the area.
The grant will be used to assist the company with construction of an indoor compost facility that converts stranded nutrients back into a stable supply of usable nutrients in the form of compost, according to UDSA. This funding would convert the facility to produce a compost tailored for a new market of larger agricultural producers outside the metro population centers.
USDA said this new value-added process includes compost drying and screening equipment to get larger amounts of a Food Safety Modernization Act-compliant, nutrient-rich compost on each truck, which can economically travel deeper into agricultural areas.
EARTH PEAK ORGANICS
Dublin, Ohio-based Earth Peak Organics is yet another compost company, awarded $3.3 million by USDA. The company, https://www.earthpeakorganics.com/…, provides residential, commercial and institutional food scraps diversion services.
The USDA grant will be used to assist Earth Peak Organics with expanding its applications of aerobic food waste digestion technology, according to USDA. The company will produce a localized, farmer-focused, closed-loop system to convert food waste to a natural fertilizer product.
As with the other composting companies, no commercial fertilizer is produced.
Perfect Blend LLC, of Othello, Washington, also received a $2.5 million grant in the USDA program. The company will use the funds to expand its biotic (from living things) fertilizer facility.
The company, https://perfect-blend.com/…, blends minerals contained in the bodies of soil microorganisms that are the source of all-natural soil fertilizer, according to the company's website. The company's fertilizer helps 92 different crops grow in addition to fertilizing landscapes and turf.
Perfect Blend LLC will expand and increase its ability to manufacture and process raw manure and fish waste into fertilizer. This project will replace a stainless-steel dryer drum and construct a liquid fertilizer blending station and a storage area at its facility.
A quick scan of the company's website located a page dedicated to products available to conventional farming as well as organic farming.
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