On Saturday, the United States government will host an event at the global climate meeting in Egypt called the Global Fertilizer Challenge. The price of synthetic fertilizer, a major source of greenhouse gas emissions, has spiked this year connected to the war in Ukraine. In the last year, companies that control global supply chains, from the oil to grain to food companies, have reported record profits. In a new report with GRAIN released this week, we found that the big fertilizer companies made billions, while prices for farmers and governments rose.
Our report, the Fertilizer Trap, found that nine of the biggest fertilizer companies made more than $84 billion in profits in 2021 and 2022. In 2022 alone, the companies are on course to generate $57 billion in profit, more than four times their profits in 2020. Farmers and governments got the bill. The report found that G20 governments and farmers paid $21.8 billion more in fertilizer imports in 2021 and 2022 — almost three times more than in 2020. These rising costs are not only driving farmer protests around the world, from Pakistan to Ethiopia to Ecuador, they are also linked to escalating food prices and food insecurity in some countries.
The fertilizer industry’s profiteering arrives as the climate footprint of synthetic fertilizer faces increasing scrutiny. At COP26, IATP, Greenpeace and GRAIN issued a report highlighting how greenhouse gas (GHG) emissions associated with synthetic fertilizer are rising rapidly and have been consistently undercounted (published in October in peer review journal). We found that nitrous oxide emissions (a persistent GHG with 273 times more global warming potential than CO2) linked to nitrogen fertilizer use was responsible for 21.5% of global agriculture emissions, and that number is rising. The production process (which requires fossil fuels) accounts for 35% of nitrogen fertilizer emissions, field use is linked to 62.4% and transportation the rest. China, India, U.S. and EU were responsible for 63% of global nitrogen fertilizer emissions. Not surprisingly, the rise in emissions is associated with expanded use — and often overuse — of synthetic fertilizers around the world. The IPCC Land Report noted that the use of nitrogen fertilizer had increased globally 800% since the 1960s.
Climate change itself is already disrupting the fertilizer industry’s long supply chains. The Mississippi River is at historic lows, limiting barge traffic for agriculture exports and stalling fertilizer imports coming up the river to the U.S. corn belt, lifting prices for farmers upwards of $50 per metric ton. While the U.S. is a major producer of nitrogen-based fertilizers, it is also the world’s second largest importer of the nitrogen-based fertilizer ammonia. The river’s low water levels are linked to a national level drought that shows no signs of easing up and is affecting much of the nation’s crop production.
The rapid growth in global fertilizer use and emissions did not happen by accident, but rather has been bolstered by national-level farm policies and international green revolution efforts. In the U.S., heavy fertilizer use has been tied to the expanded production of corn, in exchange for lost acres of small grains and land protected in conservation. Part of that rise is linked to the rise of the factory farm system for livestock, specifically for hogs, as evidenced in a U.S. Department of Agriculture analysis tying increased fertilizer usage to animal feed production.
The rise in synthetic fertilizer use has been an environmental disaster in many regions of the world, contributing to water pollution and associated health impacts, and poor air quality and premature deaths. Fertilizer runoff and associated pollution has long been associated with the loss of oxygen and water life known as hypoxia, or the Dead Zone, in the Gulf of Mexico and other waterways. Climate change itself, tied to warmer winters, may be increasing fertilizer runoff and water pollution in Midwest states. The overuse of synthetic fertilizer use can also negatively affect soil organic matter, reducing soil fertility over time. There is also new evidence that heavy fertilizer use can intensify the effects of drought on agriculture land.
As governments meet over the next week at COP27, their actions should reflect this new reality that rising fertilizer prices, supply disruptions and excess corporate profits are not a one-time blip, but rather a sign of things to come if major reforms aren’t made.
The good news is that there is a lot governments can do to support farming systems that have proven to reduce our reliance on synthetic fertilizer, reduce our greenhouse gas emissions, and improve farm income and food security. Our report with GRAIN cites numerous examples and research in multiple countries around the world where farmers have used sustainable, agroecological farming systems to reduce or eliminate synthetic fertilizer use and maintain (or even increase) production.
It's critical that governments align local, national and international policy around strategies that help reduce our reliance on synthetic fertilizers, increase the overall resilience of our food systems to handle disruptions and reduce GHG emissions. Strategies should focus on:
- Stopping overuse — Synthetic fertilizer is overapplied in much of the world, with estimates that between half of phosphorus fertilizer and up to two-thirds of nitrogen fertilizer is not taken up by the soil. Recent research shows farmers can use much less fertilizer and actually increase yields by using more ecologically sounds practices, such as growing more nitrogen-fixing plants and intercropping. In Europe and Africa, researchers found that shifts in crop rotations and other ecological practices can maintain yields, while dramatically decreasing fertilizer use. In the Midwest, researchers found that by increasing crop rotations to include three or four crops, farmers can reduce fertilizer use, cut costs, maintain production and ultimately become more profitable.
- Building soil health — Cover crops, small grains and legumes, perennials and longer crop rotations all can build soil health and reduce the need for synthetic fertilizers. The strategic planting of legumes can help fix nitrogen in the soil. There has been a significant increase in cover crop use in the U.S., but much more could be done, including increasing financial incentives to implement cover crops on farms. Proper composting can help build soil health and reduce fertilizer use, as can the integration of livestock with cropping systems. Strong soil health brings multiple benefits, including the ability to better withstand expected climate-related events.
- Addressing industry profiteering and regulatory exemptions — The fertilizer industry is highly concentrated and powerful in the U.S. and around the world. State Attorneys General and U.S. and Canadian farm groups have called for investigations of the fertilizer sector over market manipulation and pricing fixing issues. Others have documented the lack of transparency in fertilizer markets — with farmers paying wildly different prices even within states or regions. In the U.S. and many countries around the world, agriculture has consistently been exempted from regulations that protect clean air and water that other industries must adhere to. A strictly voluntary approach to reduce fertilizer use has not worked for agriculture. Even rising costs won’t necessarily reduce fertilizer use, particularly if crop prices, like corn, continue to rise. In Iowa, despite increased costs, fertilizer sales were up 14% in 2022. Appropriate regulatory protections on synthetic fertilizer production and use to protect the water, air and climate are needed to drive changes.
The last few years have taught us that countries and regions less dependent on synthetic fertilizers are better prepared to handle market and climate disruptions. Reducing fertilizer-linked emissions is a real climate solution that we can act on now. Without aligned government action at COP27 and at all levels, we won’t transition our farming systems fast enough to reduce fertilizer-related emissions and meet the urgency of the climate crisis.
