USDA Commits $500 Million to Expand Domestic Fertilizer Production After Iran War Price Spike
Rollins ties new funding to Strait of Hormuz fallout as farmers face some of the highest input costs in years
USDA Secretary Brooke Rollins on Wednesday announced $500 million in funding to expand domestic fertilizer production, Reuters reported from Chicago, tying the move directly to price increases stemming from the Iran war. The funds are earmarked for two purposes: expanding capacity at existing U.S. fertilizer plants and building new ones. Reuters’ initial dispatch did not detail an application process, award caps, or a list of eligible projects, so those specifics should be treated as pending until USDA issues a fuller release.
Why now. The timing traces to February, when the closure of the Strait of Hormuz sent fertilizer and energy prices climbing sharply. New Orleans granular urea, the most widely used nitrogen fertilizer, spiked to $567.50 per ton in May, a 45% increase from February. That spike has weighed on farm budgets already strained by several years of high input costs and soft commodity prices, and it has become one of the more politically visible consequences of the broader Iran conflict for U.S. agriculture.
Not a new number. The $500 million figure carries some history. It matches the original size of USDA’s Fertilizer Production Expansion Program (FPEP), launched under the Biden administration in September 2022 to counter fertilizer price spikes tied to the war in Ukraine. That program was later expanded to as much as $900 million and, by late 2024, had funded roughly $517 million across 76 projects. Rollins signaled at a May 19 press conference at USDA headquarters that the department intended to revive FPEP “with major changes,” after climate-related provisions in the original program had stalled a number of previously approved projects, including facilities in Washington state and Iowa. Wednesday’s announcement appears to be the follow-through on that pledge, though it is not yet clear from the Reuters one-liner whether this is new money, a reauthorization of the original FPEP allocation, or some combination of the two.
Part of a broader push. The funding lands alongside several other administration actions aimed at fertilizer costs. USDA has accelerated permitting for a $3.7 billion CF Industries ammonia plant in Ascension Parish, Louisiana, that Rollins says will become the world’s largest low-carbon ammonia facility once completed, with a permitting decision expected within 45 days of the May announcement. On June 29, USDA announced a temporary suspension of duties on imported phosphate fertilizer, projecting roughly $1.82 billion in annual farmer savings and a 22% reduction in phosphate prices. Rollins has also told lawmakers she is weighing tariff and trade-renegotiation revenue as a funding source for fertilizer infrastructure, telling a House Appropriations subcommittee in April that “we have a pot of funding … tens and tens and tens of billions of dollars,” though new capacity from that effort would not come online for 12 to 18 months.
Analysis. Taken together, the pattern suggests USDA is running two tracks simultaneously: near-term relief through trade measures like the phosphate duty suspension, which can move prices within weeks, and longer-term capacity building through grants and permitting, which by Rollins’ own admission will take years to materially change U.S. fertilizer supply. The $500 million announced Wednesday falls into the second bucket. Even under an accelerated timeline, new or expanded plant capacity funded today is unlikely to reach farmers before the 2027 or 2028 crop years, meaning it does little to address the urea and phosphate price spikes farmers are contending with heading into fall application season this year. The more immediate question for growers is less about this $500 million and more about whether trade actions, like the Morocco duty suspension already in place and the phosphate move from Tuesday, continue to accumulate fast enough to offset what the Iran conflict has done to input costs since February.
What to watch. USDA has not yet released application guidelines, eligibility criteria, or a timeline for this iteration of the funding, unlike the original 2022 FPEP rollout, which came with defined award ranges of $1 million to $100 million and a market-share eligibility test barring the largest nitrogen, phosphate, and potash producers from applying. Whether those same guardrails carry over, and whether the revived program keeps its emphasis on independent and cooperative producers rather than the dominant fertilizer majors, will shape how much of this money actually reaches new entrants versus incumbent players expanding existing footprints.
