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Fertilizer Scarcity Threatens Agricultural Productivity

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Dear readers,

I will give more measured impressions of the Milken Conference in a day or so, when I it is over (we have another day, but the last day is far thinner in terms of offerings) and have had a day or so to reflect.

However, to give a highlight, a subtext was was that many pressing world problems had solutions (and better yet, private sector solutions).

Now as much as I like to opine broadly, I (hopefully) maintain a sense of proportion as to where I have good knowledge and where I am sticking my neck out, and try to advise readers when I know I may be sticking my neck out.

By contrast, Gary Becker, a Nobel Prize winner in economics (more accurately, The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, created by Sweden’s central bank) maintained at the Monday and Tuesday lunch presentations (remember, meals have the biggest attendance and so will have the greatest impact) that unlike oil, the problem of agricultural price increases would be old news in a year or two because productivity of agriculture in the third world was so poor. All we need to do is get them to adopt even more advanced techniques). And that’s great because all those people now working the fields will produce much greater GDP per head when they move to cities and free up the land.

At least today, another Nobel winner (was it Edmund Phelps of Columbia or Michael Spence of Stamford?) bothered pointing out that food is 60% of household spending in many parts of developing countries, that 50-100% prices in food means starvation and childhood malnutrition that can lead to permanently impairment.

Moreover, if you recall the early history of the Industrial Revolution, when tenant farmers were en masse forced off their land and decamped to cities, wage rates fell because there simply wasn’t enough work for them. The number bandied about was that 1.5 billion people in China and India are involved in food production. Pray, how will you possibly find other employment for so many people if they no longer till the soil?

Equally appalling: no mention of strategies to slow population growth as part of the solution. no mention that the problem was wasn’t just population growth, but newly affluent people in emerging markets adding more animal protein to their diets (it takes roughly 10 calories of grains to produce one meat calorie). We all need (or will be forced by price) to eat foods lower on the food chain.

And even if you manage somehow to come up with enough fertilizer, it has nasty effects on the oceans. There is no free lunch.

So to the New York Times, It says fertilizer consists of nitrogen, phosphorus, and potassium, and the scarce item is nitrogen in a form plants can use. One reader in comments had said that phosphorus was running out. Anyone who has further information either confirming or denying is very much encouraged to speak up.

From the New York Times:

Truong Thi Nha stands just four and a half feet tall. Her three grown children tower over her, just as many young people in this village outside Hanoi dwarf their parents.

The biggest reason the children are so robust: fertilizer.

Ms. Nha, her face weathered beyond its 51 years, said her growth was stunted by a childhood of hunger and malnutrition. Just a few decades ago, crop yields here were far lower and diets much worse.

Then the widespread use of inexpensive chemical fertilizer, coupled with market reforms, helped power an agricultural explosion here that had already occurred in other parts of the world. Yields of rice and corn rose, and diets grew richer.

Now those gains are threatened in many countries by spot shortages and soaring prices for fertilizer, the most essential ingredient of modern agriculture.

Some kinds of fertilizer have nearly tripled in price in the last year, keeping farmers from buying all they need….

In the United States, farmers in Iowa eager to replenish nutrients in the soil have increased the age-old practice of spreading hog manure on fields. In India, the cost of subsidizing fertilizer for farmers has soared, leading to political dispute. And in Africa, plans to stave off hunger by increasing crop yields are suddenly in jeopardy.

The squeeze on the supply of fertilizer has been building for roughly five years. Rising demand for food and biofuels prompted farmers everywhere to plant more crops. As demand grew, the fertilizer mines and factories of the world proved unable to keep up.

Some dealers in the Midwest ran out of fertilizer last fall, and they continue to restrict sales this spring because of a limited supply.

“If you want 10,000 tons, they’ll sell you 5,000 today, maybe 3,000,” said W. Scott Tinsman Jr., a fertilizer dealer in Davenport, Iowa. “The rubber band is stretched really far.”

Fertilizer companies are confident the shortage will be solved eventually, noting that they plan to build scores of new factories. But that will probably create fresh problems in the long run as the world grows more dependent on fossil fuels to produce chemical fertilizers. Intensified use of such fertilizers is certain to mean greater pollution of waterways, too.

Agriculture and development experts say the world has few alternatives to its growing dependence on fertilizer. As population increases and a rising global middle class demands more food, fertilizer is among the most effective strategies to increase crop yields.

“Putting fertilizer on the ground on a one-acre plot can, in typical cases, raise an extra ton of output,” said Jeffrey D. Sachs, the Columbia University economist who has focused on eradicating poverty. “That’s the difference between life and death.”…

Overall global consumption of fertilizer increased by an estimated 31 percent from 1996 to 2008, driven by a 56 percent increase in developing countries, according to the International Fertilizer Industry Association….

Fertilizer is plant food, a combination of nutrients added to soil to help plants grow. The three most important are nitrogen, phosphorus and potassium. The latter two have long been available. But nitrogen in a form that plants can absorb is scarce, and the lack of it led to low crop yields for centuries.

That limitation ended in the early 20th century with the invention of a procedure, now primarily fueled by natural gas, that draws chemically inert nitrogen from the air and converts it into a usable form.

As the use of such fertilizer spread, it was accompanied by improved plant varieties and greater mechanization. From 1900 to 2000, worldwide food production jumped by 600 percent. Scientists said that increase was the fundamental reason world population was able to rise to about 6.7 billion today from 1.7 billion in 1900.

Vaclav Smil, a professor at the University of Manitoba, calculates that without nitrogen fertilizer, there would be insufficient food for 40 percent of the world’s population, at least based on today’s diets.

Initially, much of the increased production of fertilizer went to grains like wheat and rice that served as the foundation of a basic diet. But recently, with world economic growth at a brisk 5 percent a year, hundreds of millions of people began earning enough money to buy more meat from animals fattened with grains. That occurred at the same time that rising production of biofuels, like ethanol, put new pressure on grain supplies.

These factors translated into rising fertilizer demand. Prices at a terminal in Tampa, Fla., for one fertilizer, diammonium phosphate, jumped to $1,102 a ton from $393 a ton in the last year, according to JPMorgan Securities, which tracks the prices. Urea, a type of granular nitrogen fertilizer, jumped to $505 a ton from $273 a ton in the last year.

Manufacturers are scrambling to increase supply. At least 50 plants to make nitrogen fertilizer are under construction, many in the Middle East where natural gas is abundant, and phosphorous and potassium mines are being expanded. But these projects are expensive and time-consuming, and supplies are expected to remain tight for years.

Fertilizer is vitally important in Iowa, whose farmers grow more corn than in any other state and depend on fertilizer to increase yields.

But the combination of high prices and spot shortages has forced some farmers to revert to older methods of fertilization, making hog manure a hot commodity. Farmers are cutting deals to have hog barns built on the edges of their corn and soybean fields.

On a tour of his rolling farm in Oxford Junction in eastern Iowa, Jayson Willimack pointed to the future sites of two buildings that will hold 2,400 hogs. Their manure will eventually replace commercial fertilizer on 400 acres, about 10 percent of his farm, and save him perhaps $50,000 annually. “Every little bit helps,” he said.

Such a strategy has severe limits — manure contains so little nitrogen that tons are required on each acre. That means farmers in Iowa and abroad have little choice but to pay the higher prices for commercial fertilizer.

In many countries, those cost increases have so far been offset by record high prices for crops. But fertilizer inflation has created a crisis in countries that subsidize fertilizer use for farmers. In India, for instance, the government’s subsidy bill could be as high as $22 billion in the coming year, up from $4 billion in 2004-5.

Once new supplies become available, the rising use of fertilizer will still pose difficulties.

Environmental groups fear increased use, particularly of nitrogen fertilizer made using fossil fuels. Because plants do not absorb all the nitrogen, much of it leaches into streams and groundwater. That runoff has long been recognized as a major pollution problem, and it is growing.

A barometer of the pollution is the rising number of dead zones where rivers meet the sea. In the Gulf of Mexico, for instance, nitrogen runoff from fields in the Corn Belt washes downstream and feeds plant life in the gulf. The algae blooms suck oxygen from the water, killing other marine life.

More than 400 dead zones have been identified, from the coasts of China to the Chesapeake Bay, and the primary reason is agricultural runoff, said Robert J. Diaz, a professor at the Virginia Institute of Marine Science.

“Nitrogen is nitrogen,” Professor Diaz said. “If it’s on land, it produces corn. If it gets in the water, it produces algae.”

This month, a United Nations panel called for changes in agricultural practices to make them less damaging. The panel recommended techniques that offer some of the same benefits as chemical fertilizer, like increased crop rotation with legumes that naturally add some nitrogen to the soil.

But others say those approaches, while helpful, will be not be enough to meet the world’s rapidly rising demand for food and biofuel.

“This is a basic problem, to feed 6.6 billion people,” said Norman Borlaug, an American scientist who was awarded a Nobel Peace Prize in 1970 for his role in spreading intensive agricultural practices to poor countries. “Without chemical fertilizer, forget it. The game is over.”

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18 comments

  1. djd

    Some phosphorous-related stastics can be found at the USGS: http://minerals.er.usgs.gov/minerals/pubs/commodity/phosphate_rock/

    According to their 2008 report, known world supplies would support ≈ 120 years use at current conditions (use rate, technology, prices, etc). I am aware that USGS figures are sometimes contested and I stress I did not attempt to check them, however I would be surprised if the reserves proved to be wrong by more than half a log. Also, I did not correct for use rate growth going forward.

  2. djd

    I should probably add, that while “running out of phosphorus” is not strictly true, phosphate rock is like most mineral resources: high-quality deposits are scarce and occur irregularly aroung the world. So as it continues to be used and dispersed, it will be progressively more difficult to maintain (and indeed raise) use rates.

    So, while it is unlikely that a crisis is imminent, this issue must eventually be addressed since phosphorus has no substitutes in agriculture nor are any likely to appear. However I am optimistic on the subject, as attention paid to decreasing fixed nitrogen runoff (as mentioned in the Times article) seems likely to have spillover benefits for other fertilizers.

  3. Richard Kline

    *sigh* So much of what we do in agriculture is a mass process, and colossally wasteful. For example, flood irrigation loses enormous amounts of scarce water via evaporation. This was the reason that drip system micro-flow irrigation was developed. These work better with vegetable than with grain production methods, but still. We need to get smarter about _how_ we deliver fertilizer to the soil. The runoff issue alone is a disaster; add in shortfalls and price rises, and there is more than enough incentive to develop tarted delivery. Spot injection of liquified fertilizer? Fertilizer coated seed grain?? Obviously, many of such systems are not going to be cost-effective in most developing countries. OTOH price spikes of 400-800% aren’t too damned cost-effective, either.

    We have _got_ to get past the idea of simply dumping nutrients and water onto patches of earth and tilting our faces to the heavens to receive divine beneficence. Innovation can be a good thing—as long as it’s real innovation rather tna financial thimblerig.

  4. h2odragon

    “It takes 10 calories of grain to produce a meat calorie” …. Why is this such a common phrase now? Meat doesn’t eat grain that humans otherwise would have, for the most part; and much of the best meat ate grass or other non-food items for most of its energy input. Furthermore, the commonly cited 8:1 ratio for beef is about as bad as it gets, chickens are more like 2 or 3 to 1, even from propagandists who believe promoting their agenda is far more important than any facts.

  5. Yu-Mei

    “It takes 10 calories of grain to produce a meat calorie” It takes zero calories of grain when ruminants are fed what they should be eating–grass. Moreover, modern grass farming improves the soil, employs marginal hilly land for grazing, eliminates the need for petroleum based fertilizer, and ameliorates dead zones due to the near-zero soil/fertilizer runoff. In ag, doing more of the same isn’t going to get us out of the current mess. Other methods such as grass farming, organic aquaculture, and permaculture need to be utilzed.

  6. Anonymous

    No doubt most posters have read it already, but anyone who hasn’t, and is interested in the questions of long-term food security, should certainly read Michael Pollan’s “The Omnivore’s Dilemma.” He looks deeply into the underlying contradictions of the agricultural industry and while not necessarily providing a clear-cut alterna-answer, certainly asks some brain-clearing questions. A good, enjoyable read.

  7. Anonymous

    I watched The Milken institute video with all the nobels. Gary Becker is an ideologue and propagandist, not an objective observer.

    He should be sent for two years to one of these third world farms and see how productive he gets.

  8. microbrew

    Leaves me to wonder how much of the Green Revolution was just fossil fuel based?

    How soon until the scenario where animal and human waste is the invaluable on a mass scale for producing methane and fertilizer?

  9. Anonymous

    I remember that when Tony Blair asked to EU ministers to stop subsidising agriculture and to join the highly developed and value added technological advances (booming financial Anglo-Saxon activities, I suppose, of spreading toxic debt all over the world), the French president Jacques Chirac answered him that the main british contribution to agriculture was the mad cow disease, and the worst cooking of any european country.

    I’d say to h2odragon that mad cow disease didn’t come from feeding them with grass, but with powdered bones and the sort.

    In my town, in the very south of Europe, cows eat grass but we are running out of cows, because it’s illegal selling raw milk and milk companies pay a third of the supermarket price. Only very big farms, with hundred of heads are able to deal with the new “productivity” model required to be in the business, but those big farms don’t use grass anymore, they just spread urine to the river and the aquifers.

    In the city nobody knows that chickens in chicken farms never saw natural light, and the fluorescent lights they are used to have are turned on and off every six hours, to get two eggs in one day. The chickens are so silly! And in one year the chicken is too old, so to chicken company. I could swear that those chickens haven’t any idea of what corn is, in its natural form.

    Sorry for the rant, Yves, I read, “enjoy”, and learn quite a lot reading your blog every day. I know you like scientist views of things, but on the grand views give you interesting points of view.

    This article is very long and radical (imperial capitalist exterminism) but quite interesting in those times, it touches and links lots of things:

    The Politics of Food is Politics

    http://www.counterpunch.org/goff04242008.html

    Best wishes,

    Asuk

  10. Anonymous

    Manure is good fertilizer, and bones contain phosphorus.

    It’s all part of a cycle – which we break when we bury people in coffins, and throw sewage into our water supplies.

    Rotting corpses and piles of shit can be useless and poisonous – or they useful and create food. It’s all about location, location, location.

    Permaculture could feed the planet.

  11. djd

    “Just what the world needs: more Malthusian denial and dead zones.” – eh

    Eh mischaracterizes what had been said by giving the impression that Malthusian denial and dead zones had been promoted, when in fact neither had.

    The Times article addresses only nitrogen fertilizer, which is not subject to the usual kind of mineral scarcity, and even they explicitly mention its fossil fuel dependence and the creation of dead zones.

    The post explicitly mentions Malthusian concerns (though not by name) and the “… nasty effects on the oceans.”, i.e. dead zones.

    None of the comments above eh’s deny either issue, although neither do they all explicitly affirm both.

  12. Kim McDodge

    I know this is a late post, I just clicked from the June NYT article on investors buying the farm….

    There has been much work on soil science done that is changing the way we think about the dependence we have on additives, 80% of which, organic OR inorganic, ends up in the water table. Microbes hold the key, the nutrients in their bodies is very plant accessible so knowledge of the soil food web is imperative:

    http://www.soilfoodweb.com/03_about_us/approach.html

    All nutrients, NPK and more, are in their itsey bitsey bodies going thru their itsey bitsey life/death/life cycles. The plants take it right in. This is a huge understanding. Feed those microbes! Totally scaleable.

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