Fertilizer Shortages in the UK

I was pointed to an interesting discussion today about the possible impact the biofuels mandates are having in the UK:

Already paying the hidden cost of biofuels?

The complaint, originating in Wales, reads:

I know we are. This weekend I made inquires about ordering this year’s fertiliser for our holding.

The answer was, quite frankly, shocking. Our local supplier usually has a stock of 4,000 tonnes for local growers (we just want one tonne of that…).

This year, howewver, their total allocation is being pegged at 640 tonnes. The rest, it seems, has been shipped to the USA for the biofuel industry. The silos and bunkers are empty.

And, to add insult to injury, the meagre amount that the supplier has been left with has gone up by £100 a tonne over last year’s price.

I foresee near riots in the next couple of months at agricultural suppliers across the land.

And that’s not mentioning the cost of cereals. A poor harvest here and massive amounts of grain land being ploughed up for biofuel in North America has seen cereal prices shoot up.

As a result animal feed has gone up by a third, and I have heard one dealer predicting the £4 pint by the end of the year because of a shortage of barley. Already the major brewers are telling wholesalers to prepare for a 25 per cent hike in bottled beer prices by March.

It’s one aspect of the green fuel debate that may not have been aired much, but you can bet that it will become a major issue by the end of the summer.

In the beginning, it seemed like the entire ag sector was on the ethanol bandwagon. Then the cattle ranchers and chicken producers jumped off after their feed prices escalated. Now, looks like some overseas farmers may not be too happy (as evidenced by some of the other comments).

I don’t buy fertilizer, so I don’t really know. Anyone else have first hand knowledge of this issue? I have heard some suggest that China is also a factor, but I really don’t know how much their usage has increased.

10 thoughts on “Fertilizer Shortages in the UK”

  1. This is not surprising, after all the entire corn ethanol industry is built on a foundation of synthetic nitrogen fertilizer made from natural gas.

    This story just emphasizes the point that corn ethanol is neither a “renewable” nor “sustainable” fuel.

  2. •Competing end-uses (food and fuel)
    •Growing fundamental demand (food; better diets)
    •Diverse global customer base (developing countries)
    •Limited number of global suppliers (lack of competion)
    •High capital barriers to entry (high capital and regulator costs to extract mineral)

    These are the reasons you can find a series of presentations about fertilizer demand (and supply) on their site here: http://ir.mosaicco.com/phoenix.zhtml?c=70455&p=irol-presentations
    Words in parenthises are mine.

    Biofuel shall drive some additional demand for various fertilizers (particularly the corn/nitrogen relationship for corn-based ethanol), but there are fundamental demand drivers at work, too. Growing GDP worldwide is pushing the global grocery list. If you look at the demand charts for fertilizer, you’ll see the bulk of increase is due to this factor. Developing countries appetite for more commercial fertilizer (and this includes China) are the not-talked-about contributor to higher prices (and, really, short availability).

  3. Nitrogen fertilizer margins in the US are at historic highs. I’ve seen US ammonia fertilizer manufacturer margins quoted as high as $350/ton vs. a more typical $50/ton. This might last another couple years — but new factories near cheap natural gas will take care of the problem in due time. Fertilizer is actually a great way to export NG, much easier to ship and you get to employ a few people in the process.

  4. The interesting thing is, that fertilizer doesn’t contain carbon. Fertilizer is about Nitrogen.

    Bio stuff is good in fixating carbon, while humans are not. However, the opposite is true for nitrogen.

    Fertilizer can be fully made synthetical from solar energy. But that is currently much more expensive than from natural gas.

    You can also run a car on ammonia. You need a larger engine and tank. When the oil price 300 dollar, then it becomes economically to create ammonia from solar energy and to run your car on it.

    This effectivily puts a limit on the oil price of 300 dollar.

    At least, with biofuels, there is too much emphasis on energyyield, while the carbonyield, is the thing that will matters. And those are not the same.

  5. doggy…”Fertilizer is actually a great way to export NG, much easier to ship and you get to employ a few people in the process”…very interesting. So it sounds like the process is:

    nat gas >> fertilizer
    fertilizer >> (ship) >> U.S.
    fertilizer >> (farms) >> corn
    corn >> (ethanol plant) >> fuel

    It would be really interesting to compare the energy balance and capital costs of this flow with:

    (1)conventional LNG transportation:
    nat gas >> (LNG ship) >> U.S.
    nat gas >> CNG vehicle fuel


    (2)on-site or near-site methanol conversion:
    nat gas >> methanol
    methanol >> (tanker) >> U.S.
    methanol >> vehicle fuel

  6. As David points out, using nitrogen fertilizer made from natural gas to grow corn, and then to consume more thermal energy to turn that corn into a liquid motor fuel is not a very efficient way of using natural gas as a motor fuel.

    The CNG or methanol route would be more efficient, although it would have the major political disadvantage of making the corn and ethanol lobbies mighty unhappy.

  7. “Already the major brewers are telling wholesalers to prepare for a 25 per cent hike in bottled beer prices by March.”


  8. Just for reference, I tried to do a calculation of how much NG goes into corn ethanol through NH3/urea last year:
    TOD Comment from May 2007

    A substantial portion of ethanol would be NG for NH3 nitrogen fertilizer production. I’m not a corn farmer, but it looks like the recommendation is 100-200lbs/acre of N to continuous crop corn. If they are getting 140-180 bu/acre yields, the ethanol conversion is supposed to be 328 gallons/acre. NH3 was going $900/tonne in Canada this spring (Which is bizarre that it was $200 cheaper in the US). 200 lbs/acre of nitrogen would be $63/acre of NH3. This link says there is 33.5 MMBtu of NG per US ton of NH3. If gasoline is 125,000 BTU/gal, the heat equivalent is 268 gallons of gasoline for a US ton of NH3. That comes out to 26.8 gallons of gasoline heat value of NG per acre for NH3 or about 10% of the ethanol yield. There would be additional NG in the other fertilizers and chemicals used.

    (The prices I used were from last spring and at best this is a ballpark number.)

  9. Fertilizer is actually a great way to export NG, much easier to ship and you get to employ a few people in the process.

    I’ve been saying exactly the same thing for years. I look for the M.E. to become the world’s major source of nitrogen fertiliser. Still doesn’t change the fact that putting the fertiliser to use growing corn as a fuel crop is stupid, stupid, stupid.

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