Fertilizer is once again experiencing a seismic market disturbance. Instead of supply chains being disrupted by a worldwide pandemic, however, a significant portion of fertilizer’s woes can now be attributed to war. How America’s government officials and business leaders respond in the coming months and years will largely signal if U.S. farmers will be given the tools necessary to nourish the world on a family-friendly budget or if our nation will allow fuel, food, and fiber prices to escalate beyond the reach of many people.
All who plant crops know that fertilizer prices have more than doubled since last year. It all began when China, a major exporter of fertilizer, placed curbs on international sales. The backlog on western U.S. ports added to the supply chain pressure.
More recently, fertilizer prices were further inflamed when Russia invaded Ukraine. To financially combat the warring nation, Western countries placed sanctions on Russia that caused a steep rise in fuel costs. Unfortunately for farmers, fuel and fertilizer are tightly linked, as up to 90% of the cost associated with producing nitrogen fertilizer is tied directly to natural gas prices. Next to America, Russia is the world’s second-largest natural gas producer. Further compounding fertilizer costs is that Russia is a world leader in phosphate, urea, potash, and ammonia exports.
America’s most plausible fix is to foster more domestic fertilizer production. This will take years to develop or redevelop. Indeed, the U.S. has witnessed the closing of 27 of its 42 nitrogen production facilities between 1999 to 2008 due to high natural gas costs, according to the Fertilizer Institute. That cut the nation’s nitrogen capacity in half and made us more reliant on inconsistent international suppliers.
Starting new fertilizer plants has become even more challenging as of late. That took place when the U.S. Geological Survey (USGS) delisted potash from its critical minerals list. As a result, the permitting process has become burdensome and inconsistent. We import over 80% of our potash from Canada with the remainder previously arriving from Russia and Belarus. The latter two are no longer options.
Manufacturing fertilizer is one matter. Transportation is another. Those woes are mounting, too, as rail rates for anhydrous ammonia have shot up over 200% in the past 20 years. Our nation’s inland barge system moves over one-third of our country’s crop nutrition, and that system has far exceeded its 50-year life span. It badly needs upgrades.
USDA and the White House announced plans to provide $500 million in support for innovative, American-made fertilizer. However, that’s a drop in the fertilizer hopper. If America is going to serve as the breadbasket for democracy, far more work must be done because hungry people have become warring people throughout human history. America’s farmers have proven that we can feed the world . . . if we have the inputs to optimize yields.