March 11, 2022
Secretary of Agriculture Tom Vilsack outlined ways USDA continues to direct efforts to develop more, new, and better markets for agricultural producers while speaking before corn, soybean, wheat and sorghum growers at the Commodity Classic held in New Orleans, March 11. His plan includes expanding USDA trade missions, offering grants to incentivize American-made fertilizer and offering an update on the Ukrainian situation as it relates to agriculture.
High on the minds of many producers at the annual meeting is the rising costs of inputs, especially as fertilizer prices have more than doubled since last year due to many factors. Vilsack says it’s fair to say there are “serious issues” in reference to fertilizer costs. He says USDA is looking at actions it can take immediately to help producers pencil out costs and look to more efficient use; in the medium-term with studies into the market situation; as well as longer-term to provide more data to help producers more precisely apply fertilizer applications.
“We want the ag industry and farmers to know we get it. We know that you’re challenged with high fertilizer costs. There are things we can do, and things we can’t do,” Vilsack says. “We have control over research, our products, conservation options and resources for additional capacity.”
The top producers of the major components of fertilizer include China, Russia, Canada and Morocco, with Belarus also providing a significant share of potash. “We have to recognize we’re too reliant on outside sources on fertilizer. We’re forced to rely on countries that may or may not agree with us,” Vilsack says. An incredibly efficient global fertilizer supply chain has unfortunately left out including the importance of resilience, he explains.
Vilsack says USDA will make available $250 million through a new grant program this summer to support independent, innovative and sustainable American fertilizer production to supply American farmers. Vilsack wants to hear from the fertilizer industry on how to structure the grant program to create more American-produced fertilizer. He says it is important to know this is not designed to promote greater concentration in the sector, but how to become more self-reliant and diversify options for farmers.
USDA will use funds from the Commodity Credit Corporation set aside in September for market disruptions to develop a grant program that provides ‘gap’ financing to bring new, independent domestic production capacity on-line—similar to the recently announced meat and poultry grants that are designed to promote competition and resilience in that sector.
The new program will support fertilizer production that is independent, made in America, innovative, sustainable and farmer-focused. Details on the application process will be announced in the summer of 2022, with the first awards expected before the end of 2022.
Additionally, to address growing competition concerns in the agricultural supply chain, USDA will launch a public inquiry seeking information regarding seeds and agricultural inputs, fertilizer and retail markets.
Vilsack says USDA and the Department of Justice established a portal for farmers to educate the government on what they’re seeing out in the countryside as it relates to anti-competitiveness. He says in soliciting additional information, USDA plants to ask a series of questions as it relates to seed patents regarding ways in which companies that have seed patents are used to make it easier or more difficult to access or create new seed varieties.
“We’ve seen consolidation in every aspect of inputs,” Vilsack says, adding the pandemic showed that the push to efficiencies and profitability neglected resilience. “We need to figure out the right balance.”
Trade beyond China
Vilsack says he wanted to learn lessons from the China trade war, which definitely had an impact on agricultural markets. Before the trade war and pandemic, China imported 25% of its domestical agricultural needs from the United States. The China Phase One deal increased agricultural purchases, but it actually represents just 18% of its total agricultural imports, Vilsack says.
“During the course of the trade war China began systematic process of reducing their reliance on the U.S.,” Vilsack says. “They have diversified. I think that’s a message we need to take to heart.”
“As important as that market is, it can’t be the only market,” Vilsack continues. “We’ve got to diversify ourselves and create more opportunities outside of China.”
The keys to building trade experiences is establishing presence, people and promotions in new and expanding markets, Vilsack says. Coming off a successful in-person trade mission to Dubai, Vilsack says USDA will conduct four more trade missions in 2022.
Upcoming trade missions include the United Kingdom in June, Philippines in July, Kenya in October and Spain in November. He says these missions are designed to expand U.S. reliance beyond the one or two key markets. “We want to make sure we’re active in a number of emerging markets,” Vilsack says, which includes those opportunities in southeast Asia. Philippines is the ninth largest market of U.S. agricultural goods.
When asked about the status of a nominee for USDA’s undersecretary of trade, Vilsack says two individuals were asked to serve but were unwilling to make some of the financial sacrifices required of the job. He did not that the team at USDA’s Foreign Agricultural Services division is “remarkable.”
Ukrainian planting update
Hours before Vilsack stepped on the stage at Commodity Classic, he met via phone with the G7 leaders and his Ukrainian counterpart who was calling from a bunker. Vilsack says Ukrainian Agriculture Minister Roman Leshchenko had a single ask of G7 members: fuel.
Vilsack says Leshchenko also put the G7 countries on notice to make sure they do everything possible to provide as much stability as possible and avoid speculation. He says Ukrainian farmers intend to plant if they can get the fuel, now diverted to military applications.
“Stability is important at the early stages of a situation like this,” Vilsack says. “There is a lot of speculation and speculation can move to people making decisions or judgements that may not be based on what's going on the ground but based on what they think may happen to some degree.”
“As I listened to him, it impressed upon me the importance of all of us in a free and democratic country and never to take that for granted. I believe one of the reasons we’re able to celebrate that democratic freedom is in large part because of people in this room,” Vilsack says to the farmers gathered.
Vilsack also received applause from farmers when he reiterated his support for E15 and its role in lowering gas prices and the overall importance of renewable fuels.
When asked if the Biden administration would provide some kind of announcement soon, Vilsack says he didn’t want to speak for any other federal agency, but USDA continues to look at ways to deal with the challenging situation of rising gas prices.
Vilsack responded that USDA has $100 million to encourage additional infrastructure for higher blend pumps that can allow consumers to choose themselves the discount in gas prices E15 offers.
“The infrastructure will make E15 more available. Consumers will see that price for E15 and regular gas, and they'll obviously then make a decision about what they want to do,” Vilsack says.
Listen in as Jacqui Fatka interviews USDA under secretary for farm production and conservation Robert Bonnie.
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