The Global Fertilizer Crisis – The American Conservative

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There’s a chance things will get worse for American farmers before they get better.

Two months after Russia invaded Ukraine, the global food crisis shows no sign of abating. Food prices in the United States rose 8.8% from a year ago. The global impact has been worse. The United Nations estimates that 6.3 million children aged six months to five years will suffer from acute malnutrition this year, up from 4.9 million in 2021.

The grain is part of the story. Ukraine’s exit from world markets and the imposition of sanctions on Russia have driven up grain prices, putting populations of Third World importers like Nigeria at risk of starvation. But the effects of grain shortages, significant as they are, pale in comparison to those of a global fertilizer shortage. In addition to their central role in producing sustainable agricultural yields, fertilizers are one of the main determinants of global food prices.

Russia is the world’s largest exporter of nitrogen fertilizers. And with the global crackdown on Russian exports, countries are turning to alternative sources to try to feed their populations. Some countries have tried to increase domestic fertilizer production. Others, like India, are looking to unusual trading partners like Canada and Israel to recoup Russia’s losses. President Biden recently announced plans to allocate an additional $250 million to boost domestic fertilizer production. But given the way synthetic fertilizers are produced, the funds are unlikely to have an immediate impact and could be hampered by the government’s war on oil.

Synthetic fertilizer is usually made up of a combination of three elements: nitrogen, phosphorus and potassium. Of the three, nitrogen is the most widely used and is found in about 60% of all synthetic fertilizers. Plants need nitrogen to grow, and low nitrogen soil produces lower yields and damaged crops. Because plants cannot process atmospheric nitrogen, producers of synthetic fertilizers must convert nitrogen from the air into ammonia, a nitrogen-rich chemical that plants obtain naturally from manure and dead animals. This conversion procedure, called the Haber-Bosch process, uses hydrogen from petroleum, coal or natural gas to create synthetic ammonium.

With high gas prices and the Biden administration’s reluctance to tap into new sources of oil, input costs for domestic fertilizer producers are already high. Increased demand for hydrogen-based inputs will only increase these costs. In the absence of significant imports, additional funding of $250 million for domestic producers is unlikely to fill the gap caused by the war in Ukraine. Industry sources also say it is unlikely domestic production can be scaled up fast enough to meet the fertilizer shortage.

“On average, a modern fertilizer plant producing commercially significant volumes will take three to five years to build,” said Veronica Nigh, senior economist at the American Farm Bureau Federation. The American Conservative. She pointed to the fact that local, state and federal authorities heavily regulate the construction of fertilizer plants and added that supply chain issues would further delay the construction process.

Something has to give. As Nigh noted, “Chemicals and fertilizers make up the largest share of on-farm expenses,” at about 18% of the average farm’s total expenses. And import options from the United States are drying up fast. China, one of the world’s leading exporters of nitrogen-free fertilizers, imposed a moratorium on fertilizer exports at the end of October 2021. Other countries are reducing exports as they focus on domestic production.

And while Biden’s White House called the fertilizer price spike “Putin’s price hike,” the imposition of sanctions on Russian fertilizer exports was a political decision by members of the international community. Until March 24, the United States imposed sanctions on Russian fertilizers, which were responsible for about 20% of our diammonium phosphate imports. The Biden administration wisely exempted mineral fertilizers from its most recent list of sanctioned Russian products, but by then the damage was done. The most recent figure for the U.S. Fertilizer Price Index, which measures the weighted average of rock phosphate, phosphate, potassium and nitrogen prices, was $254.97, more than double its 2021 level.

Even if U.S. fertilizer imports from Russia return to anything like pre-sanctions levels in the coming months, there’s no guarantee things will improve for U.S. farmers. More than 40% of the world’s fertilizer is traded, Nigh said, so disruptions to fertilizer production in other countries will have inflationary effects on food and fertilizer prices in the country. As other countries and the European Union continue to boycott Russian fertilizers, their focus on domestic production and alternative import sources could have the effect of further increasing input costs for US farmers.

It is already reaching crisis levels on the ground. A New Mexico farmer named Mike Berry told Reuters he “recently paid $680 a ton for liquid nitrogen to fertilize his corn crop.” That’s more than 230 percent more than the same cost last year. If the international boycott of Russian fertilizer continues and the Biden administration remains opposed to increasing domestic oil production, there’s a chance things will get worse for Berry and the rest of America’s farmers before they get better. . We will all pay the price.

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