Tipsheet

Fertilizer Shortages Indicate an Even Bigger Crisis Is Looming

Katie Pavlich
Katie Pavlich  |  March 15, 2022 1:00 PM

As inflation wholesale prices soar past 10 percent and gas prices continue to surge, economists and farmers across the country are warning about another looming crisis. 

Farmers are seeing a fertilizer shortage. Combined with high water and fuel prices, costs are set to soar as food becomes less available. 

From Market Watch: 

Fertilizer prices were already running red hot this year before a European energy crisis fanned the flames, potentially adding to a pinch on farmers in the U.S. and around the world and stoking worries about food inflation.

“It’s almost like a perfect storm of different reasons that probably has a lot of upside in price for different macronutrients,” said Samuel Taylor, Cleveland-based executive director of research at Rabobank, in a phone interview.

Natural gas is a key ingredient in the process used to make nitrogen-based fertilizers used on a range of crops, including corn and wheat. Natural gas accounts for 75% to 90% of operating costs in the production of nitrogen, Taylor noted.

Some are warning the Russian invasion into Ukraine, resulting in new sanctions on the Kremlin, will make it much worse. Fertilizer companies in Russia are sounding the alarm. From Reuters: 

A global food crisis looms unless the war in Ukraine is stopped because fertiliser prices are soaring so fast that many farmers can no longer afford soil nutrients, Russian fertiliser and coal billionaire Andrei Melnichenko said on Monday.

"The events in Ukraine are truly tragic. We urgently need peace," Melnichenko, 50, who is Russian but was born in Belarus and has a Ukrainian mother, told Reuters in a statement emailed by his spokesman.

"One of the victims of this crisis will be agriculture and food," he said.