Most modern fertilizers include a combination of potassium, nitrogen and phosphorus. These three ingredients were critical to the Third Agricultural Revolution that began in the 1950s, helping the world avoid a Malthusian nightmare as population grew. Without these three chemicals, we would not be able to feed today’s global population of almost 8 billion people.
Unfortunately, we are currently at war with the countries that control a significant portion of potash (used to produce potassium) and natural gas (used to produce nitrogen - as well as heat homes) supply.
As illustrated by the 8 facts and 5 charts below, the world needs Russian and Belarusian potash and natural gas to grow food. While Russia and Belarus equally benefit from trade by receiving cash, the tradeoff is asymmetric. If Russian potash and natural gas exports are cut, one side is threatened with starvation (or at best, much higher food prices) while the other has less GDP.
However, as we are currently experiencing, this isn’t an all or nothing risk. Simply, the implied threat of reduced supply - whether theoretical or real - is sending fertilizer prices through the roof, putting a lot of power in Russia’s hands and threatening food security for much of the world.
The following summarizes the world’s dependence on Russian and Belarusian potash and natural gas exports, required for agriculture:
Potash - used to produce potassium - is mined while nitrogen is produced using an energy intensive process called the Haber–Bosch process. Critical to the Haber-Bosch process is the use of natural gas.
Russia, Belarus and China produce almost half of the world's potash.
Russia is tied as top producer of natural gas globally.
Russia is the world’s top exporter of natural gas.
Russia and Belarus are responsible for 40% of global potash exports.
Between 2016 and 2019, the US imported 12% of its potash from Russia and Belarus.
70% of EU potassium chloride imports come from Russia and Belarus.
US potash net import reliance as a proportion of total consumption is 90%.
Conclusion: global fertilizer supply - and by implication food supply - is under threat.
US Potash Production and Imports
Top Natural Gas Producers
Top Natural Gas Exporters
Fertilizer Prices