People largely view oil as the most important product in the world. It leads to wars and changes in availability send shockwaves around the globe. However, there is an argument that fertiliser is even more important right now in the 21st century. Fears about what will happen if the US/Israel war with Iran forces closure of the Strait of Hormuz puts this in the spotlight.
A foundational product
You may be wondering why fertiliser is so important. The fact is, without it, many countries would be unable to produce enough food. It’s vital for boosting yields of various crops, including rice and wheat. Even a small change in fertilisation can massively reduce the yield.
Think about the whole house of cards here. We need fertilisers to grow crops for human consumption, animal feed, biofuel, and much more. Shocks, such as a long term disruption to supplies, can put food security at risk. It could result in millions of tonnes of food not being produced.
Critically, there is a bigger delay here than with other products too. We’ve already seen how quickly oil prices rise when there are problems; they shot up almost overnight at the outset of the war with US/Israel and Iran. Food supplies and prices take longer to adapt. If there are issues with fertilisers, it may affect farmers in the coming months. We’ll then potentially see shortages and rising prices later in the year.
A huge issue
The Middle East has become one of the most important regions in the world for fertiliser production. The key thing is it has access to large supplies of cheap natural gas. This is noteworthy for several reasons; it’s key for making ammonia, urea, and LPG to power plants. There are huge operations in Qatar, the UAE, and Saudi Arabia.
The big problem is a massive volume of LPG, ammonia, and urea, travels through the Strait of Hormuz, leaving Middle East countries to ship around the world. So, any restrictions in shipping traffic or full closures are serious concerns. It could lead to shortages and big increases in prices.
One of the biggest worries is farmers around the world may need to make very tough decisions. If there are shortages and/or price rises, they have to consider key things like crop mixes and fertiliser application rates.
Domestic supplies
To put further emphasis on the problem, keep in mind that even countries that produce large volumes of fertilisers rely on products from the Middle East. For example, the US is one of the biggest manufacturers in the world. However, they import a lot of ammonia and urea to take advantage of lower prices.
The story is similar in various other countries; domestic supplies actually rely on imports from the Middle East. So, even if there is the capacity to produce more fertiliser to meet needs, without ammonia, urea, or LPG, it is very difficult to do it. If there isn’t capacity, it can take years and huge investments to build plants.
Talk to us about fertiliser
As you can see, we could be on the cusp of a very difficult period for global food supplies. It’s a worrying time, so it’s no surprise there is a lot of activity to try to prevent any closure of the Strait of Hormuz.
If you’re thinking about potential fertiliser shocks, start planning as soon as you can. JS Hubbuck Ltd can help; we’ve been supplying fertilisers for decades. You can contact us to learn more about products and discuss your needs. We can provide prices, delivery schedules, and more. So, get in touch today.