Not only is the price of ammonia rising to unaffordable rates for farmers but the 2022 growing season is also experiencing a fertilizer shortage. Without enough fertilizer to meet global demands, crop yields are expected to be low for staple items like wheat and corn.
Is There a Fertilizer Shortage?
Yes, the 2022 growing season is experiencing a fertilizer shortage like never before. The nitrogen fertilizer shortage stems from a variety of causes, but the main cause is rapidly increasing natural gas prices. Natural gas serves as the feedstock for the Haber Bosch process, which is used for nearly all global ammonia production.
Fertilizer Shortage USA
As we approach harvest season during a time of elevated inflation rates, the price of several products that require staple crops will likely increase further. The impacts on the average American’s budget will be challenging given how stretched their budgets already are with the current economic climate.
But the USA isn’t the one facing the worst of the fertilizer shortage. Europe has curtailed fertilizer production immensely because natural gas prices saw meteoric increases. Wheat production in France is expected to be 21 percent more expensive due to the shortage and expense of fertilizer.
Likewise, corn production costs in Ukraine are expected to be 19 percent higher. And US corn production is costing 14.5 percent more.
Corn and wheat are some of the more nitrogen-hungry crops, which is why the shortage is impacting them the most. With less corn and wheat, farmers turned to soybeans, pulses and spring barley since they require less nitrogen-based fertilizers.
Why Is There a Fertilizer Shortage?
The global fertilizer shortage stems from fertilizer production changes throughout the world. Some of those changes include the following.
- Ukraine: stopped half its fertilizer production due to high natural gas prices
- Netherlands and United Kingdom: reduced fertilizer production due to high natural gas prices
- China: limits in environmental controls, electrical blackouts, high coal prices and flooding. And China is reducing its fertilizer exports in 2022. The country’s fertilizer accounts for 10 percent of global trade for the commodity
- India: relies heavily on China for fertilizer imports, taking about half of what China exports each year.
- Russia and Egypt: limits on fertilizer exports.
- Brazil: importing 10 percent more fertilizer than normal.
- Canada: the country is focused on accelerating its fight against climate change by reducing emissions from fertilizer production by 30 percent by 2030. Meanwhile, farmers are anticipating a $10.4 billion loss from reduced crop yields.
And with shortages, North American farmers will bid up to get the fertilizer they need, driving the cost per ton higher, and perhaps making it unaffordable for countries like India where they can’t afford to outbid others.
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Food Supply Issues Stemming from 2022 Fertilizer Shortage
Ultimately, the US is not the country that will suffer the worst food supply shortages due to fertilizer shortages. Instead, it will drive up the cost of goods because US farmers can afford to pay more for fertilizer.
Brazil is headed into its growing season in the southern hemisphere. September marks the beginning of the growing season, but the government is currently scrambling to find fertilizer sources.
The world relies heavily on Brazil for the following products:
- Soybeans
- Corn
- Sugar
- Beef
- Pork
- Chicken
Historically, Brazil relied heavily on Russia for fertilizer but sanctions from the Russia-Ukraine war have made it more challenging for Brazil to acquire fertilizer from the country.
Solving the Fertilizer Shortage of 2022
This year’s fertilizer shortage is nothing new. Since the start of the COVID pandemic, we’ve seen fertilizer shortage problems in 2020 and 2021. But this year’s problem is far worse due to global disruptions. And the longer the shortage goes on, the more it is leading to crop yield issues and food scarcity problems.
Ultimately, the world is looking for a better way to produce nitrogen-based fertilizers. New processes that rely less on import/export requirements and global disruptions can help stabilize farming throughout the world.
Removing the reliance on transporting ammonia fertilizers and eliminating the need for natural gas to power the production process will help move the world from shortages to abundance.
The solution to the fertilizer shortage is changing how we think about ammonia fertilizer.
1. Green Ammonia
Green ammonia does not rely on natural gas as a feedstock. Focusing on green ammonia will have incredible benefits for the environment by reducing CO2 emissions. But it will also make fertilizer prices stabilize because it relies on renewable energy sources, including water and electricity.
Currently, most global ammonia production is brown ammonia. Turning the tide on ammonia production to make it renewable and carbon-free will help solve the shortage of fertilizer while protecting the climate.
2. On-site Ammonia Production
Even once the world reaches total green ammonia production, the challenges of importing and exporting fertilizer could still lead to disruptions and shortages.
Removing the need to transport ammonia will not only improve supply, but it will also further reduce the environmental impacts of ammonia production by getting trucks off the road.
Moving ammonia production on-site or closer to the end-user will help reduce the impacts of war, weather, international relations and a host of other outside factors on fertilizer availability. Changes in policies in other countries or reductions in their fertilizer production will have less global impact when each country oversees its fertilizer needs with on-site production.
3. Modular, Scalable Fertilizer Production
The ability to scale fertilizer production to meet the needs of each growing season will further stabilize fertilizer production. As demands in food supplies change, so must fertilizer production.
IAMM™ green ammonia units from AmmPower are modular to help meet changing needs for fertilizer production. Scale up production during the growing season and then reduce it when your needs change.
With two available systems and a storage unit option, farms of all sizes can make green ammonia on site to serve their needs. These innovative systems will start shipping in Q1 2023. Request a quote to find out if you might be a good fit for the packaged IAMM™ system.
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