Skyrocketing Fertilizer Prices May Help the Environment

When something is expensive, people use it more carefully.

Farmer spreading fertilizer on crops

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Fertilizer is fascinating. Most know it increases the fertility of soil when growing plants and crops. Few know that when we eat food made with fertilizer, we're basically eating fossil fuels. I noted in my book, "Living the 1.5 Degree Lifestyle," "Fertilizer is made from ammonia, which is made from hydrogen, which is made from natural gas. That makes it a fossil fuel product; so when we eat food made with nitrogen fertilizers, we are essentially eating fossil fuels."

Now, the cost of fertilizer is skyrocketing and driving up food prices. Increases in natural gas prices caused by Russia's war on Ukraine were always going to translate into increased food costs because Russia supplied 22.4% of fertilizer imported into the U.S. Plus, there's the equipment. According to Financial Times, "The price of diesel, which farmers need to fuel their tractors, trucks and harvesters, has soared to almost $5 a gallon."

But one should always look on the bright side of life, as Bloomberg journalists are doing in a recent article, "The Fertilizer Shock Might Change Agriculture—For the Better." They describe how bad the situation is with shortages and price increases of as much as 22% and write:

"Amid such dire predictions, it may sound callous to talk of silver linings. Yet the fertilizer shock of 2022 could ultimately end up paying dividends similar to those of the twin oil shocks of the 1970s. The Arab oil embargo brought the U.S. economy to its knees, but it also kick-started an energy conservation drive that reshaped the American auto and building industries, to name but two. Under pressure from Asian competitors, Detroit’s Big Three introduced more compact, fuel-efficient cars. Meanwhile, advances in lighting, insulation, and appliances reduced home energy use."

It is an interesting analogy; the oil shocks did kick off the energy efficiency boom in our homes and buildings, as codes got tightened to reduce the consumption of fossil fuels. Many have complained this led to bigger houses and SUVs, eating up much of the energy savings, but the consensus is that we still have come out ahead.

Excess nitrogen per hectare

Our World in Data

Bloomberg suggests that as fertilizer gets more expensive, farmers will use it more carefully and waste less of it. More farmers are testing soil and doing "precision agriculture."

There are many benefits of reducing fertilizer. There is a huge problem of nutrient pollution—the excess nitrogen and phosphorus in bodies of water that comes mainly from agricultural runoff. There are the carbon dioxide emissions from the manufacture of ammonia, estimated between 1% and 1.8% of global emissions. Bloomberg also notes that "microbes present in soil break down fertilizer, releasing nitrous oxide into the atmosphere, which pound for pound has 300 times the planet-warming impact of CO2."

The European Union, in its 2020 Farm to Fork strategy, aimed to reduce nutrient pollution, writing:

"Stemming from excessive use and the fact that not all nutrients used in agriculture are effectively absorbed by plants, [fertilizer] is another major source of air, soil and water pollution, and climate impacts. It has reduced biodiversity in rivers, lakes, wetlands, and seas. The Commission will act to reduce nutrient losses by at least 50% while ensuring that there is no deterioration in soil fertility. This will reduce the use of fertilizers by at least 20% by 2030."

That was before they had a war on their hands and a need to reduce natural gas consumption or imports from Russia.

As past experience with cars and buildings has shown, changes happen most quickly when there is an economic incentive. Everyone has an interest in reducing fertilizer use, but it is the farmer that pays for it who has the biggest incentive.

Silver linings can be painful. Higher gasoline and natural gas prices may reduce demand and encourage conservation, but they hurt a lot of people who can fall into fuel poverty. Higher food prices are forcing some to make hard choices between food and fuel.

Ultimately, fertilizer prices threaten food security around the world since less fertilizer means fewer crops. And how it impacts developed nations versus developing countries is undeniable. Bloomberg reports, "And in developing economies already facing high levels of food insecurity? Lower fertilizer use risks engendering malnutrition, political unrest and, ultimately, the otherwise avoidable loss of human life."

The response should be to fix the problem of demand: to make our homes more efficient, encourage alternatives to gasoline-powered cars, and reduce fertilizer consumption without threatening food security for vulnerable communities.