I never imagined that I would be writing so much about fertilizer in 2022. When I was growing up, there were only two things that I knew about fertilizer. I knew that it helped stuff grow and I knew that it smelled bad. But these days, experts are telling us that a global shortage of fertilizer could result in horrifying famines all over the world. Right now, to a very large degree we are still eating food that was produced in 2021. But by the end of the year, to a very large degree we will be eating food that was produced in 2022. Unfortunately for all of us, it appears that a lack of fertilizer will mean that far less food is grown in 2022 than originally anticipated.
Thanks to an unprecedented explosion in energy prices, we were already facing a fertilizer crisis even before the war in Ukraine, but now that war has definitely taken things to the next level.
Under normal conditions, a great deal of the world’s fertilizer comes from either Russia, Belarus or Ukraine…
A fertilizer shortage has added to growing concerns about the Ukraine war’s impact on the price and scarcity of certain basic foods.
Combined, Russia and Belarus had provided about 40% of the world’s exports of potash, according to Morgan Stanley. Russia’s exports were hit by sanctions. Further, in February, a major Belarus producer declared force majeure — a statement that it wouldn’t be able to uphold its contracts due to forces beyond its control.
Russia also exported 11% of the world’s urea, and 48% of the ammonium nitrate. Russia and Ukraine together export 28% of fertilizers made from nitrogen and phosphorous, as well as potassium, according to Morgan Stanley.
Global hunger rose significantly in both 2020 and 2021, but what we are going to be dealing with in the months ahead is going to be completely unlike anything that we have dealt with in the past.
In fact, one commodity expert that was interviewed by CNBC is extremely pessimistic about what is ahead…
“All of this is a double whammy, if not a triple whammy,” said Bart Melek, global head of commodity strategy at TD Securities. “We have geopolitical risk, higher input costs and basically shortages.”