The problem with the energy crisis is that it is, in fact, the crisis of everything. In a world where nearly every industry depends on energy in some form, hyperinflation is inevitable. This phenomenon is not news – you have been experiencing it for a while The best part of two years now. But while world governments use every tool in their kits to curb rising inflation, there’s not much they can do about the next food shortage.
For months, the agricultural industry has been warning the rest of the world that next year’s food production is seriously threatened, as the fertilizer industry is in dire straits. Synthetic NPK fertilizers (so named due to their composition of nitrogen, phosphorous, and potassium oxide) rely heavily on natural gas supplies. About 70 percent of the fertilizer production cost is the price of only natural gas, which is used in liberal amounts to make ammonia phosphate slurries that are composted. In fact, according to the CRU Group, European fertilizer producers in the region are currently losing almost 2000 dollars for each ton of ammonia produced. So as Russia emerged and then Indefinitely stop the flow of natural gas to Europewhich led to higher gas prices, the fertilizer sector on the continent stopped just as much 70% of its production capacity.
This is a very scary character. Commercial fertilizer plays an essential role in 40 to 60 percent of food production in the world. Unless you grow your own food or buy from a patchouli-scented co-op, chances are that most of your staples are entirely NPK-based. Food security experts have been warning of this type of crisis for years and This specific crisis Since the beginning of this year. After many decades of liberal use of chemical fertilizers, global agricultural soils are devastatingly depleted of nutrients. Without increased fertilizer use each year, these degraded lands could produce only a fraction of their current capacity, and with lower nutrient content.
This is all above else The food crisis unfolds. Russia and Ukraine together produce a great deal of grain for the world market which is often referred to as the breadbasket of the world. The conflict in the region has also impeded the delivery of the region’s grain to the market, resulting in food pressures in sub-Saharan Africa, which is dependent on imports. Earlier this summer. The recent grain trade agreement between the United Nations, Moscow and Kiev – which attempted to alleviate this problem while providing income to occupied Ukraine – I got angry Russian President Vladimir Putin. While he agreed to let the “fraud” deal go ahead – for now – the inconsistency and go has demonstrated the extreme volatility of Russia’s grain and fertilizer supply chains.
Back in July (when gas prices were much lower and the food security situation was not as dire as it is now), the International Fertilizer Association estimated that if the Russian war in Ukraine was prolonged, and high gas prices continued to reduce use. of fertilizer, Approximately 2 percent of global corn, wheat, rice and soybean production. “Even small declines in grain production can lead to significant price increases,” he said. Newsweek reports. As usual, the poorest countries will pay the heaviest price. This summer’s cereal pressure in Africa will pale in comparison to the food crises likely to hit African countries, Mexico and other developing countries with large input-dependent agricultural sectors.
So why doesn’t the world simply direct more dollars and gas toward fertilizer, considering how much is at stake? “Countries can’t force fertilizer production because they are very concerned about there being enough natural gas to heat people’s homes,” John Harbol, a natural gas broker for the fertilizer sector, told Newsweek. “They have to choose between future food production and heating and they will choose heating.”
By Haley Zarimba for Oilprice.com
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