Farmers in India are desperate. Trucks in South Korea had to be idled. Food prices, already high, could rise even further.
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.
“If we see coal prices and natural gas prices staying at the levels we are seeing currently, then we are certainly going to see higher food prices,” he said. “There’s no question about it.”
China is a linchpin of the global fertilizer trade. The country accounts for about a tenth of the world’s urea-based fertilizer exports and a third of exports of diammonium phosphate, another type of crop nutrient, according to the World Bank.
As prices of fuel and fertilizer began rising this year, China’s cabinet in June authorized billions of dollars in subsidies and other support for farmers. The next month, the country’s major fertilizer producers met with the state planning agency and agreed to halt exports.
In the fall, soaring electricity demand led the southwestern province of Yunnan, a key phosphate producer, to order drastic production cuts by energy-hungry industries, including fertilizer. And in October, China’s customs authority imposed extra inspection requirements on exports of 29 fertilizers and related products.
China’s leaders have been paying much more attention to food security since the pandemic began, said Darin Friedrichs of Sitonia Consulting, an advisory firm in Shanghai that focuses on Chinese agricultural markets.
“They were probably ahead of the curve in realizing how much this was going to disrupt global supply chains,” Mr. Friedrichs said. “And in a situation like that, it’s obviously better to err on the side of trying to have more food rather than less.”
Understand Rising Gas Prices in the U.S.
A steady rise. American consumers have seen the cost of gasoline, along with many other goods and services, surge sharply in recent weeks. Last month, gas prices hit their highest level since 2014, and the national average for a gallon of gas is now $3.41, according to AAA.
South Korea relies heavily on Chinese urea for the industrial fluid that breaks down harmful gases in diesel exhaust. Under the country’s environmental regulations, electronic control systems in diesel trucks prevent the engine from running when the urea tank is empty.
As prices of urea solution soared as much as tenfold last month, some South Korean truck drivers said they had forfeited jobs that would consume more urea, such as ones involving long distances or big hills. On a construction site, if just one heavy-duty vehicle runs out of urea, the entire project might be paralyzed.
“If my truck stops, my family’s livelihood, my children’s tuition, everything stops,” said Kim Jung-suk, 47, who drives a dump truck in Seoul.
Kim Woo-hyun, 50 — another driver, and no relation — said he spent evenings and weekends in pursuit of urea.
“I would call up a bunch of gas stations until one said it had some left over, and make an appointment with them to pick it up,” Mr. Kim said. “Then I’d show up, and it would be gone.”
South Korea airlifted thousands of gallons of urea from Australia before striking a deal with China to allow a few months’ supply to be imported.
More than half of China’s urea exports this year have gone to India. The Indian government subsidizes fertilizer to keep prices low, but distributing it to growers requires coordination between national and state authorities who are often at odds for partisan and other reasons.
When the fertilizer squeeze hit this fall, Danpal Yadav, 44, a rice grower in the central state of Madhya Pradesh, was already reeling under debt because of low crop yields last season. After coming home empty-handed from visits to government fertilizer distribution centers, he grew anguished and talked about suicide, his family said.
Time was running out for Mr. Yadav to nourish his fields. On Oct. 28, after sleeping outside a fertilizer center for three days and getting nothing, he returned home and bolted the door.
His brother Vivek later found him unconscious. He had consumed poison. Doctors declared him dead at a hospital.
“He was desperately trying to find fertilizer,” Vivek Yadav said. “This is the story of every farmer during this season.”
If you are having thoughts of suicide, call the National Suicide Prevention Lifeline at 1-800-273-8255 (TALK). In India, dial 1800-599-0019. You can find a list of additional resources at SpeakingOfSuicide.com/resources.
John Yoon and Sameer Yasir contributed reporting.
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