Challenges
Between 2021 and 2022, U.S. fertilizer prices surged to unprecedented levels, driven by a confluence of global factors. The COVID-19 pandemic disrupted supply chains, while rising natural gas and coal prices increased production costs. Geopolitical tensions, notably Russia's invasion of Ukraine, further strained supplies, as both countries are major exporters of fertilizer components. Export restrictions from key producers like China and Russia exacerbated the situation, leading to significant price hikes of 100 percent or more for many U.S. farmers. True to its growth-centered mission – and recognizing significant market demand – PCI began exploring the opportunity to produce Ammonium Polyphosphate (APP) at its Pasadena, Texas facility. One of the most widely used liquid fertilizers on the market, APP is an extremely important starter fertilizer for the agriculture industry. Because it is a liquid, it can easily reach and provide nutrients to new seeds, providing 100 percent water-soluble phosphate, the form most efficiently utilized by plants. APP is produced through a high-heat reaction of concentrated phosphoric acid and ammonia. PCI conducted a test trial of APP production utilizing a contracted mobile reactor in 2021, but to permanently expand its APP production would require significant capital investment in an APP reactor and storage facilities.
Solutions
In September 2022, the United States Department of Agriculture announced that it would make $500 million available to U.S. fertilizer suppliers through the Fertilizer Production Expansion Program (FPEP) to expand capacity, improve competition, and increase supply chain resilience within the agricultural fertilizer and nutrient management sector while increasing the domestic availability of fertilizer and nutrient alternatives to agricultural producers. Morrison worked with PCI to rapidly craft and submit a competitive grant proposal within the first FPEP funding round, just 45 days after the program was released. The application included a clear work plan and budget, strong financial projections for the project, and a robust package of support letters, including agricultural customers, community nonprofits, and labor organizations who supported the project.
Successes
PCI was awarded $4,999,999 in USDA FPEP funding to purchase and install both a permanent APP reactor and a 10,000 ton holding tank at its Pasadena, Texas facility, and to refurbish an existing tank for storage of necessary inputs. With USDA grant funding to accelerate the company’s own significant investment, PCI was able to complete the construction project and begin APP production by the end of 2024, with the resulting APP fertilizer expected to reach farmers throughout the nation beginning with the 2025 growing season. With this new infrastructure, PCI Nitrogen has reinforced its commitment to supplying U.S. farmers with vital nutrients at competitive prices.
About the client
Rooted in tradition. Propelling growth. This mission has driven Interoceanic Corporation (IOC) since its founding by Elio Mazzella, Sr. in 1983. Originally organized as a small fertilizer trading office, the company has grown to become an industry leader and full-service supplier, marketer, and distributor of agricultural commodities focused on helping farmers feed the world. In 2016, through their affiliate PCI Nitrogen (PCI), IOC purchased and revitalized a struggling ammonium sulfate plant in Pasadena, Texas. PCI is one of the largest producers of bulk synthetic grade granular ammonium sulfate in the world and produces 1.2 million tons per year of sulfuric acid (SA), ammonium sulfate (AMS), and ammonium thiosulfate (ATS) combined.
