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Global Market Variables Affecting Urea • Agricultural Policy News

New York Times writer Raymond Zhong wrote an article this week on market factors associated with urea, and pointed out that, “[Prices] are reaching levels not seen in over a decade. In this time of shortages and inflationary worries, that alone may not seem too surprising. Corn urea connects several disparate strands of the global economic disruption, showing how easily extreme weather conditions and maritime disturbances can cause supply shortages shine.

“People and industries of all kinds are feeling the shocks. In India, the lack of urea has made farmers fear for their livelihoods. In South Korea, this meant that truck drivers could not start their engines.

“Urea is an important type of agricultural fertilizer, so price increase could ultimately mean higher costs at dinner tables around the world. The Food and Agriculture Organization of the United Nations’ food price index is already at its highest level since 2011. The coronavirus pandemic has caused large numbers of people to go hungry, and the Rising food prices could make it even harder to meet basic food needs. The prices of two other widely used plant foods are also skyrocketing. “

Mr. Zhong explained, “One of the main reasons for soaring fertilizer prices is soaring prices for coal and natural gas. Urea in your urine is produced in the liver. The industrial type is manufactured using a century-old process that converts natural gas or gas derived from coal into ammonia, which is then used to synthesize urea. “

2021 Virtual Illinois Farm Economic Summit – farmdoc webinar, “Supply Bottlenecks and Management Decisions,” presented by Gary Schnitkey and Nick Paulson (December 3).

While discussing the factors that led to the higher prices, the Times article stated that “China and Russia, two of the largest producers, have restricted exports to ensure the supply of their own farmers. In the case of China, an energy crisis has led some regions to ration electricity, forcing fertilizer factories to cut production.

Hurricane Ida led several large chemical plants to suspend operations when it crossed the US Gulf Coast in August. Western sanctions against Belarus have affected that country’s production potash, the key ingredient in another fertilizer. Port delays and high transport costs – plant foods are bulky products – have increased costs. “

The Times article added that, “China is a mainstay of the global fertilizer trade. The country accounts for about one-tenth of world exports of urea-based fertilizers and one-third of exports of diammonium phosphate, another type of crop nutrient, according to the World Bank.

“As fuel and fertilizer prices started to rise this year, the Chinese cabinet authorized billions of dollars in June in subsidies and other aid to farmers. The following month, the country’s major fertilizer producers met with the state’s planning agency and agreed to stop exports.

Chinese leaders have been paying much more attention to food security since the start of the pandemic, said Darin Friedrichs of Sitonia Consulting, a Shanghai-based consultancy that focuses on Chinese agricultural markets.

“They were probably ahead of the curve realizing how much it was going disrupt global supply chains‘said Friedrichs. “And in a situation like that, it’s obviously better to err on the side of trying to have more food rather than less.”

The Times article stated that “More than half of China’s urea exports this year went to India. The Indian government subsidizes fertilizers to keep prices low, but their distribution to producers requires coordination between national and state authorities who are often at odds for partisan and other reasons.

Margarita W. Wilson

The author Margarita W. Wilson