Why the Next Food Crisis May Start With Fertiliser

Prior to the current issues in Iran and the on/off blockade in the Strait of Hormuz, I’d never really thought about how fertilizer was made.

We’ve been monitoring the use of fertilizer by farmers using our SCI mobile App, but not for any grand geo-political reasons, we simply wanted to know the carbon footprint of the crops so our customers could use the data for carbon in-setting towards their Net Zero goals. Fertilizer use is one of the factors in calculating the carbon equivalent emissions (CO2e) from agriculture.

I was aware that fertilizer contained nitrogen, phosphorous and potassium, but as far as myself and our farmers were concerned, there was an inexhaustible supply of low-cost fertilizer in the local dealers, and our main focus was on the amount used and how it would be applied.

We’re now all aware of how the Haber-Bosch process to manufacture fertilizer takes nitrogen from the air and why it needs substantial amount of energy to drive the process, which links its cost to the price of oil and gas. The high energy needs also meant that around 30% of the fertilizer production takes place in the Middle East due to the abundant suppliers of gas. We also know that much of the phosphorous added to the fertilizer is mined in the Middle East and the combined result is over 30% of fertilizer and urea shipments pass through the Strait of Hormuz.

The first sign of the impending crisis for us, was when one of our customers asked if the data from our low carbon farmers App could quantify the use of fertilizer by the farmers supplying their low carbon rice. They had foreseen the potential impact on their supply chain, and we were able to provide the data from our platform within minutes.

The next critical development we observed, was when some of the farmers in our low carbon schemes started to say that they may not plant their next crop as the rising cost of fertilizer, combined with the increased cost of diesel for their farm machinery, could make it uneconomic to grow rice. The farmers were being squeezed between the rising production costs and the fixed cost of the rice, which was viewed as a ‘known value item’ by the retailers. If the retailers sold a basic staple at a higher price, it would impact on their customer’s price perception of their brand, so they resist any price increases.

We also noticed a fall in the quantity of fertilizer being applied by the farmers, and while this was a theoretical benefit for the carbon footprint calculation, as the nitrous oxide gas produced by excessive fertilizer use has 200 times the global warming potential of carbon dioxide, it may also reduce the yield, which has an impact on food security and the final CO2e calculation which is based on Kg of CO2e per Kg of rice produced.

One positive outcome of the Iran conflict was that the input cost increases improved the focus on our sister project; regenerative farming of rice, corn and cassava. Use of rotational and intercrops of ‘green fertilizer’ can deliver a significant reduction in the amount of fertilizer needed to produce the same yield. Our measurements, again using our farmers App, have shown that a 75% reduction in fertilizer use can be delivered using simple and practical regenerative farming techniques.

So our farmers’ App and its’ reporting platform, which was originally developed for low carbon rice monitoring, has now been repurposed to provide essential data for buyers.

In addition to data on the input costs and final yields, we can also check, real-time, that the farmers are following the required regenerative farming practices that will result in lower demand for chemical fertilizers. We’ve also added two-way communication to our App, so we can provide immediate coaching when we see a farmer not following the recommended practices.

Looking ahead, the fertiliser challenge is not merely an agricultural issue. It is a food security issue, a commercial threat and an economic issue. The organisations that thrive over the coming years will not simply be those that can buy at the lowest price, it will be those that buy intelligently whilst also demonstrate, with confidence and transparency, that good farming practices are being used wisely.

Rob Chester

CEO at Supply Chain In-sites Ltd