Europe’s Natural Gas Shortage Could Trigger A Food Crisis
- Energy crises impact nearly every aspect of our lives, and that is particularly true of food markets, with food production next year expected to be severely threatened.
- About 70 percent of the cost of fertilizer production is solely the price of natural gas, and as the price of energy soars, the cost of making and moving food is increasing alongside it.
- At the same time, Russia’s invasion of Ukraine and threats from Putin that Russia may alter grain export routes have only added to uncertainty in food markets.
The problem with an energy crisis is that it’s actually an everything crisis. In a world where virtually every industry relies on energy in some form, runaway inflation is an inevitability. This phenomenon is not news – you’ve been experiencing it for the better part of two years now. But while global governments are using every tool in their kits to curb the rising inflation rates, there’s far less they can do about the coming food shortage.
For months, the agricultural industry has been warning the rest of the world that next year’s food production is severely threatened, as the fertilizer industry is in shambles. Industrial NPK fertilizers (so named for their makeup of nitrogen, phosphorus, and potassium oxide), are heavily reliant on natural gas supplies. About 70 percent of the cost of fertilizer production is solely the price of natural gas, which is used in liberal amounts to make the ammonia phosphate slurries that turn into fertilizer. Indeed, according to CRU Group, European fertilizer producers in the region are currently losing approximately $2,000 for every ton of ammonia produced. So as Russia has stemmed and then indefinitely stopped the flow of natural gas into Europe, sending gas prices through the roof, the continent’s fertilizer sector has halted as much as 70 percent of its production capacity.
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