Dan Kniffen, president of the Centre County Farm Bureau, said the prices farmers are getting for their crops are not keeping up with rising costs — especially the price of fertilizers.
“Everybody that's growing crops this year is in a negative position," Kniffen said.
One major factor: the war in Iran. About a third of the world’s fertilizer shipped by sea passes through the Strait of Hormuz, leading to fertilizer shortages and a spike in prices.
Kniffen was speaking this week at Penn State's Ag Progress Day after an information session focused on the cost of fertilizers and a possible long-term solution for farmers in Pennsylvania and the northeast.
A project called KeyState Energy, if approved and built, would produce urea and urea ammonium nitrate fertilizer in Karthaus in Clearfield County using natural gas from a site nearby in Clinton County. The gas would also power the operation.
Perry Babb, CEO of KeyState Energy, who spoke at the session, said for the past two years the northeast has been largely reliant on Russia for nitrogen fertilizers.
"So we knew when we began developing the concept, we'd have a competitive advantage on proximity to market in the northeast mid-Atlantic," Babb said. "We could displace international imports, and we'd have a competitive advantage on gas feedstock."
Kniffen said this spring nitrogen fertilizer urea cost more than $1,000 a ton, up from around $350 a ton in recent years.
“Now start multiplying that times hundreds of acres that our local producers are raising. You know, the number gets pretty big pretty fast," he said. "It actually makes your mortgage payment very small."
Kniffen and other farmers praised the KeyState project for its potential impact on farmers, along with construction and long-term jobs and economic benefits.
“The fact that we can have a domestic production hub for one of our most important inputs in Pennsylvania is going to be huge," said Cory Chelko with the Clinton County Farm Bureau.
But for some, the project is raising environmental concerns, including the impact on air quality, water and traffic in an area known for outdoor recreation.
If approved, construction would take an estimated two and a half years with completion as soon as 2031.
