I’ve been following the issue of supply-chain shortages carefully. Of all the stories that have plagued the news over the last two years, one of the most disturbing was a piece I read last November entitled “Fertilizer Shortages Could Become the Death Knell for Global Food Production.”
Normally I dismiss the scare factor in these kinds of doom ‘n’ gloom articles; but as someone involved in small-scale homesteading, this one caught my attention.
“The production of fertilizers has stopped for various reasons and prices have reached record highs,” begins the article. “Sky-high prices for electricity and transport will have a major impact on food prices, but fertilizer shortages risk knocking out large parts of global food production. The consequences could be grave.”
How grave? As it turns out, very grave.
Fertilizer factories across Europe have been closing down their operations due to the high costs of natural gas, which is used in production. In America, fertilizer production and availability have been crippled by everything from hurricanes hitting the Gulf Coast to fires in fertilizer plants (North Carolina and Washington) to (oddly) train derailments (Iowa and Minnesota). In short, fertilizer is a lot scarcer and more expensive than before.
Recently, Fox’s Tucker Carlson interviewed a farmer named Ben Riensche, the owner of Blue Diamond Farming Company in Iowa and a farmer of 16,000 acres in that state. Riensche crunched numbers to illustrate the direct correlation between fertilizer availability and prices, and food availability and prices. Then he said something startling: “If you’re upset that gas is up a dollar or two a gallon, wait until your grocery bill is up $1,000 a month, and it might not just manifest itself in terms of price. It could be quantity as well. Empty-shelf syndrome may be starting.” (It’s worth noting that Carlson was so staggered by this information, he asked Riensche to repeat and confirm that prediction.)
Americans are already dealing with skyrocketing inflation, and food prices are up 24% over just the past year. Large-scale commercial food production, it must be pointed out, is intimately connected to the large-scale availability of commercial fertilizer.
And who are two of the biggest exporters of fertilizer in the world? You guessed it, China and Russia. Last year, China (the world’s top fertilizer exporter) banned exports of phosphate until June 2022. That alone put an enormous crimp on the world’s supply of fertilizer.
“In August 2021,” notes this article, “fertilizer prices were expected to go up by 10 percent. By January, the predicted increase rose to 80 percent. … Like it or not, the world economy is tightly interconnected.”
As if this weren’t bad enough, Russia invaded Ukraine. Crop-wise, these two countries account for about 30% of world wheat exports, 19% of corn exports and a staggering 80% of sunflower oil. The invasion has choked off more than a quarter of the global wheat trade, about a fifth of corn, and 12% of all calories traded globally. Any guess what this conflict will mean for the availability and prices of these commodities?
Then Vladimir Putin, in his infinite wisdom, threatened to crash world food supply by withholding fertilizer. Russia produces 13% of the world supply of potash, phosphate and nitrogen for fertilizer. It’s tempting to dismiss this threat as hyperbole, but Putin isn’t known for his sense of humor. It’s best to take his threats seriously. He followed through on Thursday, when Russian Minister of Industry and Trade Denis Manturov said Russia decided to suspend fertilizer exports. Putin is a desperate man, desperate to justify his invasion of Ukraine on the world stage. Desperate men do desperate things.
Europe, already on edge over the conflict, is circling the wagons when it comes to food. Hungary – one of Europe’s most grain-rich nations – is banning all grain exports effective immediately. Ukraine has done the same.
In some ways, a shortage of fertilizer is one of the biggest issues the world faces – and that includes war, threats of war, inflation, COVID, rising crime and a host of other current ills. That’s because food is a universal requirement and an immediate need. Starvation is a common tactic of tyrants (just ask the Ukrainians). Alfred Henry Lewis said it best: “There are only nine meals between humanity and anarchy.”
Modern agriculture is scarily, frighteningly, dependent on commercial fertilizers to feed the world. “Half the world’s population gets food as a result of fertilizers … and if that’s removed from the field for some crops, [the yield] will drop by 50%,” Svein Tore Holsether, head of agri company Yara International, told the BBC.
For a multitude of reasons, it’s like we’re having this “perfect storm” of issues facing world agriculture. Weather, storms, droughts, pandemics, supply-chain problems, conflicts, fertilizer shortages – the list goes on and on. As a result, countries are moving into a stage called “food protectionism.” This is an every-man-for-himself position where exports are severely curtailed or halted, and imports are ramped up (if possible) to try and make sure each nation can feed its people.
“Governments are taking steps to safeguard domestic food supplies after Russia’s invasion of Ukraine roiled trade and sent prices of key staples skyrocketing,” notes Bloomberg. “Protectionist measures, which have already picked up in recent years as the Covid-19 pandemic spurred concerns about shortages, could spell more bad news for global food trade and add pressure to food inflation. … Indonesia, the world’s biggest exporter of edible oils, will tighten its control over shipments in a sign of growing protectionism around the world as countries grapple with soaring food prices. … Other countries that have taken to food protectionism include Hungary, which is banning grain exports. Argentina and Turkey also made recent moves to boost their control over local products. Moldova, albeit a small shipper, has temporarily halted exports of wheat, corn and sugar.”
As someone once put it, “When the bread runs out, the circus won’t be enough.”
While there isn’t a “solution” or an easy fix to this issue, forewarned is forearmed. There’s one idea that will go a long way toward addressing what may be looming crop shortages. I’ll discuss this concept in next week’s column.
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