Ukraine: How the Global Fertilizer Shortage Is Going to Affect Food

Yves here. We’ve repeatedly mentioned fertilizer as a critical agricultural input that is subject to the fortunes of the war in Ukraine. This article provided a detailed breakdown of what it takes to make fertilizer, including its high energy requirements, and how farmers decide how much to use.

By John Hammondm Professor of Crop Science, University of Reading and Yiorgos Gadanakis, Associate Professor of Agricultural Business Management, University of Reading. Originally published at The Conversation

We are currently witnessing the beginning of a global food crisis, driven by the knock-on effects of a pandemic and more recently the rise in fuel prices and the conflict in Ukraine. There were already clear logistical issues with moving grain and food around the globe, which will now be considerably worse as a result of the war. But a more subtle relationship sits with the link to the nutrients needed to drive high crop yields and quality worldwide.

Crops are the basis of our food system, whether feeding us or animals, and without secured supply in terms of volume and quality, our food system is bankrupt. Crops rely on a good supply of nutrients to deliver high yields and quality (as well as water, sunlight and a healthy soil), which in modern farming systems come from manufactured fertilizers. As you sit and read this article, the air you breath contains 78% nitrogen gas – this is the same source of nitrogen used in the production of most manufactured nitrogen fertilizers.

However, to take this gas from the air and into a bag of fertilizer takes a huge amount of energy. The Haber-Bosch process, which converts nitrogen and hydrogen into ammonia as a crucial step in creating fertilizers, uses between 1% and 2% of all energy generated globally by some estimates. Consequently, the cost of producing nitrogen fertilizer is directly linked to the cost of fuel. This is why the UK price of ammonium nitrate has climbed as high as £1,000 per tonne at the time of writing, compared to £650 a week ago.

Fertilizer inputs to farming systems represent one of the largest single variable costs of producing a crop. When investing in fertilizer, a farmer must balance the return on this investment through the price they receive at harvest. Adding more fertilizer, for a small improvement in yield, might not pay for itself at harvest.

This calculation between the cost of fertilizer and the value of the crop produced – the “breakeven ratio” – is typically around six for a cereal crop (6kg of grain needed to pay for 1kg of nitrogen fertilizer), but with the rise in fertilizer prices it is currently around ten. To remain profitable, farmers will need to keep a particularly close eye on production costs, and potentially use less fertilizer. However using less fertilizer will reduce yields and quality, adding to pressure on the food system as a whole.

The Bigger Picture

The global food system was already under pressure. During the pandemic, as many economies emerged from lockdowns and recovered, the rapid rise in activity increased demand on energy. The spike in gas prices triggered a pause in the production of fertilisers at some UK facilities in 2021, causing a rise in prices.

Since many farmers buy fertilizer in advance, some may have escaped this rise and so it was unlikely to impact immediately on the food supply and prices. But while fertilizer production restarted, global fuel prices have not recovered and continue to climb.

This brings us to the current conflict in Ukraine. The latest sharp rise in fuel prices is directly impacting on the prices of fertilizers, which helps to explain why the United Nations Food and Agriculture Organization (FAO) food price index reached its highest ever value in February – and is rising at the highest rate since the 2008 financial crisis.

Even then, the February data only partly reflected the effects of the invasion, since it happened late in the month and some price rises will be delayed: higher fertilizer prices are going to force farmers to either make an equivalent rise in crop prices at harvest or use less fertilizer. Higher prices for grain at harvest will exacerbate inflationary pressures in the economy, since the supply chain will eventually transfer the costs to the consumer in the form of higher food prices.

Russia and Ukraine are also major producers and suppliers of fertilizer and their raw materials. For example, Norwegian group Yara, the biggest producer and supplier of fertilizer in Europe, makes much of its product in Ukraine. Reducing western trade with Russia, and the disrupted supply lines in Ukraine, will therefore add another layer of pressure to the production and supply of fertilizer.

Russia is responsible for nearly a tenth of global nitrogen fertilizer production. Russia also has a comparable share of phosphate fertilizer and together with Belarus around a third of potash production, though in many cases these are not applied to soil every year and have much lower energy costs, so will have less of an immediate impact on yields and food production.

Vladimir Putin has explicitly been connecting the disruption to the trade in fertilizers with a coming surge in food prices. The Russians have just announced a suspension in fertilizer exports to the west. With major markets in Brazil, China and the US for Russian ferilisers, these global suppliers of grains to the world will be impacted.

Ukraine is also a huge agricultural producer in its own right, supplying significant quantities of cereals and oil crops to global markets (12% of the world’s wheat and the world’s largest supplier of sunflower oil). So at a time when many crops in Ukraine are due to be sown or those already in the ground are expecting fertilizer and pesticides, disruptions will put further pressure on this year’s harvest and lead to higher food prices. At particular risk from reductions in Ukrainian and Russian grain supplies are Egypt, Turkey and Bangladesh.

Food Security

When you couple this situation with the impact of the pandemic and climate change (including extreme weather), it all adds up to a growing threat to food security. Even in 2019, before the pandemic, the FAO estimated that 690 million people or 9% of the world’s population, were facing food insecurity and going hungry. Since then, the food price index has gone up 39%.

In this context, calling for an immediate government intervention to the market is therefore the natural thing to do. Yet government budgets are severely stretched after COVID, leaving little room for direct monetary support and contribution. In view of the recent promises to remove all Russian oil and gas from our imports, there will be some tough decisions ahead for governments, farmers and consumers alike.

In the medium term, it highlights the need to transform our food system, using more green energy. We should also be encouraging more sustainable diets, which contain fewer grain fed animal products; and regenerative agricultural practices, which improve soil health and the efficiency of nutrient use by the crop.

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  1. Louis Fyne

    Another 2nd/3rd order effect that nitrogen-urea is also used as diesel exhaust cleaner (diesel emission fluid, DEF).

    Post-2012 air quality regulations require that post-2012 diesel engines all have electronic locks that do not allow the engine to crank without DEF. DEF was cheap and one gallon per year is plenty for an ordinary driver.

    DEF production may slow due to energy disruptions. Or given all the export bans on grain, it is also possible that countries ban the export DEF too out of self interest.

    DEF shortage at any price = supply chain chaos.

    We are already on the cliff’s edge with so many things. And given that the stupid folk in the road has been taking at every juncture, the US is going to jump off this cliff too.

    1. InThePines

      Removing SCR/DEF systems from trucks voids warranties, violates federal regulations, and has really unpleasant health effects on people exposed to the exhaust. It’s also trivial and overlooked by roughly 49 states in the US. Lots of this has gone on in the last couple years as shortages of emissions system parts filled dealer lots with disabled trucks.

  2. PlutoniumKun

    The good/bad news is that this is on top of an already critical situation, largely caused by the shut down of Chinese base chemical production last summer due to electricity problems. Prices of many fertilizers had been shooting up even before the war. The only sector likely to be minimally effected is organic producers.

    I think the real threat is likely to be fertilizer nationalism. Many countries will come under extreme pressure from farming and food lobbyists to ban exports to protect local producers. The Chinese have already been doing this. Existing trade rules will be ignored.

    The losers in this type of war will of course be the poor, as its those countries that will be least able to capture supplies for their own use. Westerners in particular will not give up their milk and beef to help Bangladeshi’s eat.

    1. The Rev Kev

      I was reading earlier today that the Chinese harvest has been called ‘the worst in history’ by their agricultural minister so you can bet that their mind’s are concentrated now on a stable supply of fertilizer as well as wheat. At least there are rail lines between Russia and China which should help ease shortages if they get too bad down the rack. But I think that at the moment the Russians are not exporting grain for the next few weeks-

      1. Wukchumni

        There’s so much food insecurity in the USA, on top of most not knowing how to cook anything, if there were shortages of food on account of lack of fertilizer, we’d go a little crazy.

        Fertilizer is one thing in regards to the 666 million fruit & nut trees in Cali, this will be the 3rd year of a particularly persistent drought in which almost everything will be nourished by ancient fossil water…

        Lost one cherry tree last year-a Rainier, which sucks as it was 6 years old and good for a small harvest, back to future with a new one in it’s place and a small amount of firewood with a backstory.

        I’ll be fertilizing the other dozen today, many of the early ripening varieties are off to the races in bloom, while the stragglers are coiled and ready to strike up the colors but not yet.

        1. drumlin woodchuckles

          California grows the luxury food that makes life beautiful. Various non-Californias grow the utility food which keeps survival possible. If California food goes extinct, no one will die. But no one will enjoy their food-lives as much.

          Michigan can grow all the potatoes and cabbages and turnips and carrots and rubabagas and turnips and corn and soybeans needed to keep Michigan from famine. But not enough artichokes and winter lettuce and wine and etc. to make life more pleasant.

  3. Ignacio

    Thank you for this. How bad things can get is now very uncertain. For instance, there may be crops that have been over-fertilized and some adjustment on these wouldn’t be that bad. Or there could be global competition for fertilizers and some countries might suffer more than others. This, for instance, might explain at least in part why many African countries are very much upset with Western reaction to Ukraine. Are we willing to risk hunger here and there but preferably ‘there’? An analysis of fertilizer usage and commerce by country and crop would be handy.
    Why if for instance there is enough fertilizer for tulips but not for maize because economics?

  4. Louis Fyne

    —Vladimir Putin has explicitly been connecting the disruption to the trade in fertilizers with a coming surge in food prices. The Russians have just announced a suspension in fertilizer exports to the west.—

    Russia banned urea exports in 2021. Supplies were already tight before Feb. 2022. As mentioned above China had electricity rationing last winter which caused Chinese nitrogen factories to shut down. Same with EU factories.

    The planet was on a fertilizer tightrope before the war

  5. Eclair

    I recently purchased a one kilo bag of flour, grown by small, sustainable farms in Washington’s Skagit Valley and ground by a local mill. It is a varietal, high protein content, and produced an excellent loaf of bread (mixed with a lower priced AP flour!). Price was $8.50.

    Compare this to the price of a 5 pound bag of commercially grown and milled all purpose ‘white’ flour, which runs about $4.50, depending on the brand and where you buy it.

    Our current commodity food system has resulted in us becoming wasteful; I throw around cheap AP flour like it was dust. If I am paying four or five times as much for a small batch, locally grown and milled flour, I treat it like gold dust.

    And, I am fortunate to be able to pay the higher price. Many are not.

    1. drumlin woodchuckles

      As long as you and others who are able to pay the higher price to keep shinola growers in business, shinola growers will be kept in business.

      Perhaps we should regard it as the price we pay to keep an oppositional defiant parallel betterfood system in existence so it will continue staying in existence.

  6. Tom Stone

    I wonder how much the sanctions have to do with the state of Joe Biden’s bowels.
    He’s cranky at the best of times and he’s 80 years old now.
    Look at the video of him delivering Strom Thurmond’s eulogy and compare it to video taken in the last 3 years.
    Joe Biden is petty and cruel, remember the $600 he failed to deliver would have made a big difference to tens of Millions of Americans.
    I suspect Joe threw a tantrum.
    And here we are.
    Oh, Shit.

  7. drumlin woodchuckles

    The primary concern of this article appears to be nitrogen fertilizer. Potassium ( “potash”) is mentioned in part of one offhand sentence.

    Since the primary concern is nitrogen fertilizer, the article gives commenters yet another opportunity to mention the uncontested fact that a few farmers ( one in ten thousand or less) are getting yields at or above what their Haber Bosch neighbors get without using any Haber or any Bosch. And their no-Haber no-Bosch products are of equal or higher nutri-density quality than the product from their Haber Bosch neighbors. But their Haber-Bosch neighbors would rather fight than switch.

    In video after video, Gabe Brown shows how his neighbor’s soil is sterile soft brick compared to his own fertile bio-soil. And year after year the neighbor could also compare and contrast the neighbor’s operation to Gabe Brown’s operation. But the neighbor does not do that as far as we the video viewers can tell. Year after year the neighbor remains pleased and proud to be Gabe Brown’s bad example. The neighbor would rather fight than switch.

    I believe that if Haber Bosch prices rise so high that the neighbor would drive himself into roach motel liquidation if he tried to pay those prices, that the neighbor would rather go into liquidation with Haber Bosch than to admit that Gabe Brown’s hippie methods are correct. I believe this will be repeated all over farm country, if the price for Haber Bosch nitrogen goes so high that trying to pay it will drive Haber Bosch farmers into roach motel liquidation. If the price really does go that high, then I will be proven right or wrong.

    There is nothing society can do to change the mindset of the willfull Haber-Bosch farmer. The only thing that eco-minded people can do is to keep buying from eco-bio correct farmers to keep them in business so that they can survive as a stub to build a new non-toxic agriculture outward from if the Haber-
    Bosch mainstream agribizniss sector collapses like the American stock market in 1929. And store up food individually and in groups and in churches, civic centers, etc. And turn as much of your yard into gardens as your neighbors or your Neighborhood BusyBully Associations will permit.

    1. juno mas

      Yes. especially to the last paragraph. My local community environmental council (CEC) now promotes local community food gardens. Instead of lobbying the local politicos it is engaging people directly: exposing them to production by local “farmers’ and the sustainable soil practices.

      It, of course, is also getting the locals acquainted so they will be able act as a group with those with knowledge are combined with those with muscle (to do the heavy work for those that can’t). Maybe the communists were on to something.

      1. kareninca

        “getting the locals acquainted so they will be able act as a group”

        There were exceedingly brutal battles in both of the community gardens where I had plots. It is crucial to find people who can get along with other people. I guess such people exist?

    2. Wukchumni

      Unlimited food via Haber-Bosch and unlimited money via fiat both came about around the same time…

    3. kareninca

      I had two community garden plots here in Silicon Valley. One was turned into a golf course; the other into a vacant lot (since homeless people kept moving into the garden).

      Since was vegan, I tried to be a vegan gardener. Boy, were my crops terrible (except the beans).

      I’ll never forget the elderly guy from China who had a plot at one of the gardens. His produce was fabulous. Then I noticed that he was using great gobs of chemical fertilizers. I tried to convince him that that wasn’t good for the soil, but he thought I was an idiot. I bought him several bags of manure at great psychic cost to myself (since I was vegan), but he wasn’t interested. Then I also noticed that most of my fellow plotholders were either secretly or inadvertently using chemical fertilizers (e.g. by adding potting soil to their beds; the potting soil contained chemical fertilizer).

      Convincing people to change how they garden can be a challenge, especially if they are having success and you are not, and I was not. There was one person in the whole place who I am confident grew by the book and had success; her plot was fabulous; she was a master gardener. So we could see it was possible. However, I still don’t know how she did it. I know she spent a fortune to do it since she mentioned some of her expenditures on specialty soil treatments; perhaps those were one-time costs, but they were very high.

      1. drumlin woodchuckles

        There are books on vegan gardening. Here is a good one. It appears to be on slightly reduced sale price from the publisher itself, Chelsea Green, which is a NOmazon source for this book.

        Here is an article about what makes Will Bonsall so known and respected in the seed-saving community.

        Here is a bunch of random images of Will Bonsall from a bunch of random URLs, in case you want to go URL diving.;_ylt=A0geKYkqaDJimDcAj.tXNyoA;_ylu=Y29sbwNiZjEEcG9zAzEEdnRpZANMT0NVSTAzNl8xBHNlYwNzYw–?p=will+bonsall+image&fr=sfp

        This can all let you decide whether Will Bonsall is really all that great anyway and whether you should buy his book.

        I bought his book. I think it is a good book.

  8. juno mas

    RE: Wheat production in Ukrine

    Because the Ukraine produces an essential (Middle East/Asia) food crop, I think the Russians may not leave the Ukraine any too soon. Producing ~20% of the worlds wheat (Ru/Uk combined) and fertilizer production, the Russians just may see the military cost of controlling the countryside as a net positive.

    1. Polar Socialist

      It bears mentioning that the main agricultural areas are in Eastern Ukraine, with mostly pro-Russian population and their own militias (armies, really) who have fought Ukrainian army for 8 years already. For Russia the military cost will be more in the form of providing the locals with modern weapons.

      A lot depends on the peace agreement. The separatists from Zakarpattia (Carpatian Ruthenians) who voted for autonomy in federated Ukraine in 1991 but never got it, are now contacting Kreml with ideas of autonomy or independence. It may be that each day of fighting makes it more certain that Ukraine will split in the end, either by external or internal forces.

      1. drumlin woodchuckles

        How pro-Russian will the East Ukrainians remain after the current Russian invasion? Time will tell.

        1. Polar Socialist

          The administration of the Kherson Oblast stated today that they want to “establish trade, economic and cultural ties with Russia”.

          The “humanitarian corridors” from Mariupol have been open since yesterday to Russia, Donetsk Republic and Ukrainian government area. Almost none of the refugees chose the last one, according to Russian MoD (so take with appropriate amount of salt).

          But yes, time will tell.

  9. BondsOfSteel

    1% and 2% of all energy… isn’t that a similar energy footprint of cryptocurrency. Seems like an apt metaphor for our times. The rich trading images of apes in the most wasteful energy intensive way possible…. while the poor starve.

    Let them eat Dogecoin!

  10. Aaron212

    -“Hey whatever happened to my anti-vax Russia supporting nextdoor neighbors?”

    -“Who cares?! Today is Soylent Blue(tm)(r) Day!”

    1. RobertC

      I’ve articulated before the following (from the FAO report) is an intentional strategy by Putin and Xi

      “Globally, if the conflict results in a sudden and prolonged reduction in food exports by Ukraine and the Russian Federation, it could exert additional upward pressure on international food commodity prices to the detriment of economically vulnerable countries, in particular. FAO’s simulations suggest that under such a scenario, the global number of undernourished people could increase by 8 to 13 million people in 2022/23, with the most pronounced increases taking place in Asia-Pacific, followed by sub-Saharan Africa, and the Near East and North Africa.”

      I believe China with its global fishing fleet and with Russia’s petroleum products, fertilizers and breadbasket crops, will feed the Asia-Pacific and help India. The EU will be either feed MENA or be flooded with starving refugees.

      Donald Rumsfeld said you go to war with the army you have. Russia and China didn’t have the US’s dollar-powered economic sanctions army so they created their own with food security. It’s going to invade Europe while the US will be hands in its pockets across the Atlantic.

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