Thread
fertilizer data
-surprise(?) contestant: Trinidad
-all the good global trade stats are paywalled. like $500+ paywalled
-however it's clear the big supply chain snags for N America are "trucker shortage" (e.g. bad pay), not wars/trade wars
-nobody's talking demand elasticity??
-surprise(?) contestant: Trinidad
-all the good global trade stats are paywalled. like $500+ paywalled
-however it's clear the big supply chain snags for N America are "trucker shortage" (e.g. bad pay), not wars/trade wars
-nobody's talking demand elasticity??
There are things about the fertilizer panic narrative that just do not make sense.
However, w/o access to real data it's impossible to cut through the BS. This is v frustrating. Paywalls allow people who can pay for the info- largely traders!- to control the narrative at will.
However, w/o access to real data it's impossible to cut through the BS. This is v frustrating. Paywalls allow people who can pay for the info- largely traders!- to control the narrative at will.
What I can say is, like grain, there is no such thing as a fixed global supply or demand for fertilizer.
Each country's production & use can fluctuate a *lot* year to year depending on price pressures, domestic energy situation, labor ::cough::, etc.
Each country's production & use can fluctuate a *lot* year to year depending on price pressures, domestic energy situation, labor ::cough::, etc.
For ex: N fertilizer is one of the few fertilizers that's manufactured from scratch, not mined.
This is the Haber-Bosch process. Take some of the N2 gas that makes up most of our atmosphere, give it heat & pressure to turn it into NH3 (ammonia), & turn NH3 into other N products.
This is the Haber-Bosch process. Take some of the N2 gas that makes up most of our atmosphere, give it heat & pressure to turn it into NH3 (ammonia), & turn NH3 into other N products.
The Haber-Brosch process is usually powered with methane. So, N fertilizer exporting countries = natural gas exporting countries.
And, since methane is the main ingredient in N fertilizer, N fertilizer prices rise & fall with natural gas prices.
And, since methane is the main ingredient in N fertilizer, N fertilizer prices rise & fall with natural gas prices.
The EU also pipes in lots of methane from Russia & uses it to make "their own" N fertilizer. : /
I'm not able to pull up data but it appears the EU also buys a lot of finished fertilizer from Russia.
So I think it's reasonable to be concerned about fert prices IN EUROPE.
I'm not able to pull up data but it appears the EU also buys a lot of finished fertilizer from Russia.
So I think it's reasonable to be concerned about fert prices IN EUROPE.
However: Russia is not the only source of gas for EU.
-Trinidad is a huge exporter of natural gas & ammonia
-It's already set up to export via ship bc…it's made of islands
-It's actually cut exports for both way down in recent years & is well positioned to bring them back.
-Trinidad is a huge exporter of natural gas & ammonia
-It's already set up to export via ship bc…it's made of islands
-It's actually cut exports for both way down in recent years & is well positioned to bring them back.
Trinidad & Tobago sit on the same oil basin as Venezuela. Per Trinidad's official info their full NH3 export capacity is 5.2M metric tons. That actually exceeds Russia's exports!
And yet, Trinidad doesn't even show up on a lot of collections of world fertilizer trade data! WHAT
And yet, Trinidad doesn't even show up on a lot of collections of world fertilizer trade data! WHAT
For whatever reason Trinidad just hasn't been reporting its export figures to a central UN data collecting body the last few years.
So you have to guesstimate Trinidad's volume by looking at other countries' import tallies, and a lot of trade stats just DON'T DO THAT.
So you have to guesstimate Trinidad's volume by looking at other countries' import tallies, and a lot of trade stats just DON'T DO THAT.
You may also note other gaps in data collection, like the World Integrated Trade Solutions screencap a couple tweets up
inexplicably left out Saudi gotdang Arabia. a massive NH3 exporter
inexplicably left out Saudi gotdang Arabia. a massive NH3 exporter
This means anybody trying to make sense of global fertilizer trade & demand is likely doing so with TREMENDOUSLY hole-y data.
Unless they have access to the premium paywalled data. And they're more likely to be commodity traders & bankers than journalists. : /
Unless they have access to the premium paywalled data. And they're more likely to be commodity traders & bankers than journalists. : /
Anyway, when the pandemic drove energy prices way down, Trinidad & Tobago's energy-centered economy took a real hit.
They idled a bunch of gas extraction & ammonia manufacturing plants.
Plants that are now looking to reopen.
caribbeanbusinessreport.com/news/trinidads-ngc-proman-discuss-reopening-of-chemical-plants/
They idled a bunch of gas extraction & ammonia manufacturing plants.
Plants that are now looking to reopen.
caribbeanbusinessreport.com/news/trinidads-ngc-proman-discuss-reopening-of-chemical-plants/
This is what I mean when I say "global supply for fertilizer isn't fixed." Trinidad's got all this spare NH3 production capacity just lying around.
Is it enough to 100% make up for Russia's drop in production? How much of Trinidad's oil/N fert will make it to EU? Who's to say.
Is it enough to 100% make up for Russia's drop in production? How much of Trinidad's oil/N fert will make it to EU? Who's to say.
What can be said is Trinidad is unlikely to be the only oil/N fert exporting country to have had to cut production bc of pandemic demand slack.
E.g., it's probably not the only N-exporting country with lots of spare capacity lying around.
E.g., it's probably not the only N-exporting country with lots of spare capacity lying around.
It's not exactly a secret!
It took me 20 minutes of googling to get rough figures on Trinidad's potential vs actual NH3 production capacity.
A real journalist could, idk, call somebody up in the Trinidad & Tobago oil ministry for current details.
It took me 20 minutes of googling to get rough figures on Trinidad's potential vs actual NH3 production capacity.
A real journalist could, idk, call somebody up in the Trinidad & Tobago oil ministry for current details.
But I'm not seeing anybody do that!
Never mind digging around to find out how much extra N fert different countries can make.
I'm not seeing a single piece of "fertilizer shortage" journalism that even realizes idle production capacity is a THING that CAN EXIST.
Never mind digging around to find out how much extra N fert different countries can make.
I'm not seeing a single piece of "fertilizer shortage" journalism that even realizes idle production capacity is a THING that CAN EXIST.
This strongly suggests "reporting" on fertilizer shortages
is just copying & pasting whatever talking points industry reps & commodity brokers are putting out.
In other words, IT'S JUST ADVERTISING FOR PRICE BUBBLES.
is just copying & pasting whatever talking points industry reps & commodity brokers are putting out.
In other words, IT'S JUST ADVERTISING FOR PRICE BUBBLES.
Ok now let's go to North America & the real kink in our regional fertilizer supply chain: LABOR.
I pulled up some scary headlines on how "the war in Ukraine will hit American farmers' pockets" and you know what?
I pulled up some scary headlines on how "the war in Ukraine will hit American farmers' pockets" and you know what?
A lot of em up saying "buuuuut what's actually driving up N America's fertilizer prices is we've been having rail strikes & truck driver shortages for months."
Our problem ain't raw materials, folks!
It's that we won't pay people to deliver them!
Our problem ain't raw materials, folks!
It's that we won't pay people to deliver them!
A sampler:
www.agweb.com/news/crops/crop-production/american-made-fertilizer-horizon-2022
www.agweb.com/news/crops/crop-production/nutrien-increase-potash-production-amid-eastern-europe-suppl...
www.agweb.com/news/crops/crop-production/american-made-fertilizer-horizon-2022
www.agweb.com/news/crops/crop-production/nutrien-increase-potash-production-amid-eastern-europe-suppl...
Most of what we're seeing in North America's fertilizer prices is plain old pandemic-era "shitty jobs aren't worth dying for" problems.
They've been going on for years!
But it's just a lot easier to blame it on a war, than failure to pay people for necessary work.
They've been going on for years!
But it's just a lot easier to blame it on a war, than failure to pay people for necessary work.
Plus, the US makes enough N fertilizer that our N fert prices are set by our own natural gas prices.
We just had a cold-ass La Nina winter.
That drives up natural gas prices! We'd be having high fertilizer prices regardless of whatever's happening in eastern Europe.
We just had a cold-ass La Nina winter.
That drives up natural gas prices! We'd be having high fertilizer prices regardless of whatever's happening in eastern Europe.
It's hardly the first time that's happened. In 2008, 2014, etc natural gas prices spiked & drove up fertilizer prices.
Elevated fertilizer prices due to higher gas costs are so commonplace, it kinda feels like accounting for it should be a normal part of farm management?
Elevated fertilizer prices due to higher gas costs are so commonplace, it kinda feels like accounting for it should be a normal part of farm management?
This brings me to the final piece of the fertilizer supply/demand puzzle
y'know.......demand
y'know.......demand
We treat fertilizer demand like it's a constant. Inelastic. No matter how much fertilizer costs, farmers have to buy it!
BOLLOCKS
thread break, to be continued. and yes nutrientheads, I will be talking about K & P, not just N, fear not
BOLLOCKS
thread break, to be continued. and yes nutrientheads, I will be talking about K & P, not just N, fear not
As a crop scientist: I can't speak to what's going on in Europe but the US farm sector is super weird about fertilizer.
Farmers treat it as cheap insurance. Cause most years, it IS cheap!
That's why we have dead zones in the Gulf of Mexico & Chesapeake! They use way too much!
Farmers treat it as cheap insurance. Cause most years, it IS cheap!
That's why we have dead zones in the Gulf of Mexico & Chesapeake! They use way too much!
Current estimates are close to 2 MILLION tons of N wash into the Gulf of Mexico every year.
Mostly from fertilizer abuse in the ag sector.
blog.ucsusa.org/elliott-negin/reviving-the-gulf-of-mexicos-dead-zone/
Mostly from fertilizer abuse in the ag sector.
blog.ucsusa.org/elliott-negin/reviving-the-gulf-of-mexicos-dead-zone/
"But how is that possible? How can an entire sector be that wasteful, keep shooting themselves in the foot, & not change?"
welcome to American agriculture baby
welcome to American agriculture baby
To understand fertilizer abuse, you have to understand
1) Most US farms (98%+ this year) are family farms
2) Farms play a specific role in farm households' personal finance.
3) The vast majority of American family farms are SIDE HUSTLES, NOT JOBS.
1) Most US farms (98%+ this year) are family farms
2) Farms play a specific role in farm households' personal finance.
3) The vast majority of American family farms are SIDE HUSTLES, NOT JOBS.
It's not new! White-collar side hustles have been the core of US farming for a long time!
That's what American Gothic is ABOUT. It's satire on ppl who are self-important about Being Farmers but actually they're a merchant, accountant, doctor or banker.
That's what American Gothic is ABOUT. It's satire on ppl who are self-important about Being Farmers but actually they're a merchant, accountant, doctor or banker.
What Grant Wood was getting at wasn't that it's bad to farm as a side hustle, but that it's bad to be SELF-IMPORTANT about it.
I however will contend that side hustle farming is actually bad!
Fertilizer abuse is a great example of why.
I however will contend that side hustle farming is actually bad!
Fertilizer abuse is a great example of why.
Say you have 200 acres of corn. If you operate it smart (mostly just avoid buying unnecessary/oversized field equipment), you can net $10-30K depending on the year.
A household cannot live on that. Hence the doom & gloom about small family farms.
It's a GREAT side hustle though! Especially considering corn only takes 1-2 weeks of labor out of the year.
It's a GREAT side hustle though! Especially considering corn only takes 1-2 weeks of labor out of the year.
That's the big secret of US ag. "$10-30K net for 200 acres" sounds awful.
"$10-30K net for 2 weeks' work" is AWESOME though.
That's the real reason corn & soy are so popular. It's not subsidies. It's bc the crops lend themselves well to low-effort side hustles.
"$10-30K net for 2 weeks' work" is AWESOME though.
That's the real reason corn & soy are so popular. It's not subsidies. It's bc the crops lend themselves well to low-effort side hustles.
And that's what is kind of lying under the surface when people talk about how ag innovation is about "reducing labor." It's about turning inherited property into minimum-effort side hustles.
It's really mean to say it. But it's also true
It's really mean to say it. But it's also true
Anyway, let's take it back to fertilizer abuse.
Using fertilizer right is all about timing. Ideally you want to apply a little bit at a time, and avoid doing it right before big rain storms.
That's already a logistical nightmare on its own.
Using fertilizer right is all about timing. Ideally you want to apply a little bit at a time, and avoid doing it right before big rain storms.
That's already a logistical nightmare on its own.
However. If a farm is a side hustle, applying fertilizer correctly is often just not possible.
You just apply it whenever you can get to it. Weekends, maybe an evening or two. Regardless of weather. And you'll tend to do 1-2 big dumps of fertilizer instead of smaller doses.
You just apply it whenever you can get to it. Weekends, maybe an evening or two. Regardless of weather. And you'll tend to do 1-2 big dumps of fertilizer instead of smaller doses.
This helps explain why manure is so underutilized as a fertilizer.
Manure is cheap- folks will pay you to haul it away. But it has ~1/10th the nutrients/ton as synthetic fertilizers. So, using manure takes 10x as much driving.
Not gonna happen on a side hustle farm!
Manure is cheap- folks will pay you to haul it away. But it has ~1/10th the nutrients/ton as synthetic fertilizers. So, using manure takes 10x as much driving.
Not gonna happen on a side hustle farm!
There's also the criminal underuse of cover crops. There are scores of interviews with the few farmers who do use them, and it's p much unanimous: cover crops MAKE TONS OF MONEY.
Especially in years when fertilizers are expensive! Legume cover crops save so much money!
Especially in years when fertilizers are expensive! Legume cover crops save so much money!
Cover crops also slow the leaching and erosion that cause farms to lose P, K, Ca, & other nutrients way down.
Cover crops don't eliminate the need for fertilizer. But boy do they cut it WAY down. In a very financially significant way.
Cover crops don't eliminate the need for fertilizer. But boy do they cut it WAY down. In a very financially significant way.
That's why it's completely wild that farmers have convinced a lot of well-meaning hipster types that we have to pay them to use cover crops "because they're too expensive."
fucking hell what a racket 🤣
fucking hell what a racket 🤣
I love how blunt about it this farmer is. Everything factoid he has to say about cover crops is pretty standard, but the kid gloves are off when he says it LOL
Just gonna keep re-posting this farmer interview about cover crops until everybody reads it.
www.agweb.com/news/crops/crop-production/skeptical-farmers-monster-message-profitability
Just gonna keep re-posting this farmer interview about cover crops until everybody reads it.
www.agweb.com/news/crops/crop-production/skeptical-farmers-monster-message-profitability
He's very clear about why most farmers don't pick up on cover crops, even though they make fuck-tons of money.
The way he puts it: convenience.
Yep, that's it!
And why does convenience matter so much? Because like I just ran through, US farming is largely a side hustle.
The way he puts it: convenience.
Yep, that's it!
And why does convenience matter so much? Because like I just ran through, US farming is largely a side hustle.
So before the thread break we talked about fertilizer supply.
Then we talked fertilizer demand.
I wish we talked about demand more. It's not fixed! There's a LOT we can do to cut US fertilizer demand way, way down.
Then we talked fertilizer demand.
I wish we talked about demand more. It's not fixed! There's a LOT we can do to cut US fertilizer demand way, way down.
The fact that we're not using those tools- cover crops, better utilization of manure, etc- isn't just an environmental problem.
It's a financial problem. And it's a national security problem.
It's a financial problem. And it's a national security problem.
We're constantly told that farmers are "forced" to farm badly by agribusiness.
But that doesn't hold water. Half-baked farming methods are caused by the side hustle approach. And farms were doing that before agribusiness was a thing!
But that doesn't hold water. Half-baked farming methods are caused by the side hustle approach. And farms were doing that before agribusiness was a thing!
So here we have ourselves in yet another capitalism quandary.
Our problems are totally solvable. But we don't solve them bc to even get started we'd have to admit some facts that make people with money look bad.
Oh yeah that 200 acres in Iowa? Worth at least $1M lol
Our problems are totally solvable. But we don't solve them bc to even get started we'd have to admit some facts that make people with money look bad.
Oh yeah that 200 acres in Iowa? Worth at least $1M lol
TL;DR panicking over fertilizer prices- without having real talk with ourselves about why the US uses so damn much- is super messed up!
It's a great way for landed gentry to keep fucking over the country in every single way AND demand pity while they do it. Ugh. Fuck that.
It's a great way for landed gentry to keep fucking over the country in every single way AND demand pity while they do it. Ugh. Fuck that.
