Fertilizers Double in Price, Oil Price Rises, Food Prices Skyrocket

Worldwide demand for fertilizer is skyrocketing. The primary competition for chemical fertilizer for farmers in Canada, the USA, Europe, and Latin America consists of three nations.

China, India, and Viet Nam. In Viet Nam farmers have converted from using natural "dung" to chemical fertilizers and their yields are growing. Don't buy the argument that Ethanol is causing this high food price. Ethanol is a drop in the bucket compared to the demand for food coming from China, India, and other nations in Asia.

Companies such as "Heart of Iowa" in Ames, Iowa report that as they sell and order fertilizer for farmers, they are finding that now they have to order several months in advance. Suppliers in Canada and other places simply cannot fill the demand, and in some cases there is a 6 month back log for items such as nitrogen and potash.

Danner Farms, in Iowa, is a typical operation, growing corn, and well established in the area. Danner reports that "Potash and Nitrogen have doubled in price, in the last 12 months".

With a global food shortage, food prices are rising, and farmers are trying to increase production. Even though fertilizer has doubled in price, food prices have gone so high, that it is still profitable to use expensive fertilizer.

The food chain is directly connected to the cost of oil and energy. When oil goes up, food costs rise.

There is and interesting historical perspective of the supply and demand of food and oil. In 2006, the world production of oil, was met and then outstripped by the world demand for oil. Prices have increased ever since. In 2004, the world production of food was met and outstripped by world demand for food.

The U.S. government may have contributed to this, because the USA was producing so much cheap grain and rice that foreign nations were encouraged just to buy American production, and to forget efforts to become self sustaining. Indeed in 2004, the U.S. Secretary of Agriculture said: "Don't grow rice, just buy American, we can feed the world cheaper than you can grow it."

But, with successive increases in the costs of production, costs of land, fertilizers, fuels, and labor, suddenly the USA was not able to produce enough to feed the world, and furthermore, production in the USA has been hampered by hundreds of thousands of farmers who have gone broke. Suddenly, there is new hope for U.S. and world production, but each nation on earth, indeed each individual on earth, should consider ways to produce or encourage production of something for the world. Our thought for you is this: "PRODUCE SOMETHING, EITHER ENERGY OR FOOD, BUT DO SOMETHING".

ThIs brings us to the next section that suggests we need true solutions, not political manipulation.


May 16, 2008, world oil prices hit a new high at $128 per barrel. Saudia Arabia made a token "PR" move, and announced that it would increase production by 300,000 barrels per day, but this was seen simply as a dole to keep from embarrassing George Bush, who just begged the King to increase output. The US government announced that it would stop buying oil for the strategic petroleum reserve. This too was a political move, to calm the anger of U.S. Senators. McCain and Clinton suggested a holiday from the "gas tax". This appears to by a good political phrase, but won't mean much to the average consumer. We can't see how that this is a solution to the problem of food prices, shortages, and energy price increases.

Politicians keep making "symbolic" gestures, but we don't see many actually doing anything that will create long term solutions, such as creating tax incentives for wind power, or making financing and rebates available for solar energy.