Congressional legislation

Throughout the first half of this year, we have reported on the rising costs of fertilizer and other inputs here on the Ag Law Blog. We talked about the introduction of the Lowering Input Costs for American Farmers Act here, we’ve discussed the class action lawsuits making price fixing allegations against fertilizer companies here, we’ve shared a blog post about the Iran conflict and its contribution to rising costs here, and we’ve discussed the issue on Farm Office live (you can view our previous videos and upcoming schedule here).  The problem of rising input costs is certainly top of mind for many producers this Spring. It also appears to be on the mind of members of Congress. In addition to the Lowering Input Costs for American Farmers Act, the Homegrown Fertilizer Act was also introduced in March with the aim of increasing domestic fertilizer production and thus lowering fertilizer costs. The bill is bipartisan and co-sponsored by Senators Amy Klobuchar (D-MN), John Thune (R-SD) and Roger Marshall (R-KS). 

How would the bill boost domestic fertilizer production?

If passed, the Homegrown Fertilizer Act would provide USDA grants and direct or guaranteed loans to “assist eligible entities in increasing or expanding the manufacturing, processing, and storage of fertilizer and nutrient alternatives in the United States.”  An “eligible entity” must be located in the U.S. and must be one of the following: an independently owned and operated business, a nonprofit organization, a producer-owned cooperative or corporation, a certified benefit corporation, an Indian Tribe, or a State or local government.  In an effort to increase competition, the bill expressly bars fertilizer manufacturers, processors, and distributors above a certain market share from receiving funds.

Under the bill, USDA grants of up to $100,000,000, could be awarded to eligible entities. However, those businesses, nonprofits, governments, Tribes, and cooperatives who are awarded grant money would also be responsible for procuring non-federal matching funds equal to the amount of the grant they receive. The bill prioritizes projects that improve fertilizer production methods, efficiency, and competition within the ag nutrient market, increase the number of fertilizer products available, reduce prices for farmers, and benefit agricultural commodity production in the United States.  Fertilizer and nutrient businesses, nonprofits, cooperatives, etc. eligible for grants would be able to use the money for the following purposes:

• Building a new facility, buying an existing facility, or purchasing land for a facility;
• Covering predevelopment costs, such as engineering and other professional fees;
• Providing working capital to expand capacity or increase outputs;
• Modernizing or expanding an existing facility, including making updates to existing buildings or constructing new buildings on site;
•  Purchasing or modernizing processing and manufacturing equipment;
• Developing, customizing, and installing equipment, devices, and technology to improve processing functions, worker conditions, or safety;
•  Installing or updating equipment that reduces emissions, increases fertilizer use efficiency, or improves air and water quality;
•  Ensuring legal compliance with packaging and labeling requirements, such as sealing, boxing, labeling, and conveying;
• Confirming legal compliance with occupational and safety regulations;
• Engaging in workforce recruitment, training, apprenticeships, and retention to ensure expansion projects are adequately staffed;
• Increasing domestic storage of fertilizer or nutrient alternatives; and
• Such other activities as the Secretary determines to be appropriate.

The hope of the sponsors is that USDA grants and loans used for the above purposes would bolster domestic fertilizer production, creating a more competitive marketplace for fertilizer, resulting in lower prices for farmers. You can read full text of the bill here. We will continue to follow this important issue for our readers.