Wednesday, December 8, 2021

"Urea Shortage Is Felt Around the World"

From The New York Times:

This is a story about one of those unsung forces that quietly keep the world running. It is a story about the clockwork interconnectedness of modern civilization, about how disturbances in one part of the planet can kick up storms in another.

This is a story, naturally, about urea.

Prices for the humble chemical — yes, the stuff in urine — are soaring to levels not seen in over a decade. In this time of everything shortages and inflation worries, that alone might not sound too surprising. But urea links up several disparate-looking strands of global economic disruption, showing how easily extreme weather and shipping turmoil can cause supply shortfalls to radiate.

People and industries of all kinds are feeling the shocks. In India, a lack of urea has made farmers fear for their livelihoods. In South Korea, it meant truck drivers couldn’t start their engines.

Urea is an important type of agricultural fertilizer, so rising prices could ultimately mean higher costs at dinner tables around the world. The United Nations Food and Agriculture Organization’s index of food prices is already at its highest level since 2011. The coronavirus pandemic has caused huge numbers of people to face hunger, and increased food prices could cause even more to have trouble meeting basic dietary needs. Prices of two other widely used plant foods are skyrocketing as well.

One big reason for surging fertilizer prices is surging prices of coal and natural gas. The urea in your urine is produced in the liver. The industrial kind is made through a century-old process that turns natural gas or gas derived from coal into ammonia, which is then used to synthesize urea.

But a freakish confluence of other factors is pushing up prices as well.

China and Russia, two of the biggest producers, have restricted exports to ensure supplies for their own farmers. In China’s case, an energy crunch led some areas to ration electricity, which forced fertilizer factories to slash production.

Hurricane Ida drove several large chemical plants to suspend operations when it tore through the U.S. Gulf Coast in August. Western sanctions on Belarus have hit that nation’s production of potash, the key ingredient in another fertilizer. Port delays and high freight fees — plant food is bulky stuff — have added to costs.

All of this is rippling around the world in unexpected and sometimes painful ways.

In India, fears of fertilizer shortages have led crowds of desperate farmers to gather outside government distribution centers and clash with the police.

Truckers in South Korea have worried about not being able to work. The reason? Urea goes into an industrial elixir that reduces trucks’ greenhouse gas emissions and that South Korea doesn’t allow diesel engines to start without.

Britons have fretted about running out of the tiny bubbles in their carbonated drinks. Why? A big fertilizer maker, CF Industries, halted operations at two plants in England in September, citing high natural gas prices. And food-grade carbon dioxide is a byproduct of the ammonia production process. One of the two plants has since restarted production.

As for the big question of whether food prices are about to shoot up globally, John Baffes, a World Bank economist who studies commodity markets, said he believed farmers had already largely locked in fertilizer prices for the current crop season.

But a different picture could emerge early next year, when the U.S. Department of Agriculture publishes the first results of its yearly survey of American farmers’ planting intentions. These will give clues about how growers worldwide are responding to the latest market conditions.

“Normally, those are boring reports,” Mr. Baffes said. “Nobody knows about them. Nobody reads them.”

Not this time, he said....