Farming has changed dramatically in the last century. The horse as a source of power, the cow as a source of fertilizer, and triennial mix of corn, alfalfa or soy, and letting the land lay fallow is gone. Today on the fertile lands of Iowa, Illinois, and Nebraska the biennial dance of corn and soy is giving way to economic pressure from ethanol and advancing technology; unthinkable even five years ago, today "corn on corn" is the norm.
Things are changing in equally dramatic ways in the drylands of the Dakotas, but the trend runs opposite to that seen in the wetter, richer lands to the east. Skyrocketing ammonia prices and limited moisture are driving lands out of annual wheat production and into a biennial rotation of fallow and wheat production.
This sounds like something only an agronomist could love, but the reality of the matter is that lives are on the line eighteen months from now based on the decisions farmers are making today.
(If you like this you might also like Global Human Protein Deficit.)
Historically a ton of ammonia cost about eighty bushels of wheat; $2.25 wheat, $200 ammonia, and this ratio held for forty years. Two years ago that long standing relationship broke down. Today wheat is $4.50 and ammonia is $1,000 – over two hundred bushels of wheat are required to purchase a ton of ammonia.
The first effect of this has been a reduction in fertilization on wheat planted. Instead of 14% protein we'll be seeing crops with protein closer to the 8% range. Instead of the seventy bushels per acre achieved with full fertilization we'll see yields sliding off towards the twenty five bushels per acre unfertilized wheat yielded. Fertilization isn't a go/no go decision, it's a continuum, but as the farmers seek balance it is clear that this will be a case of less being more – less money out for ammonia means more money in their pockets.
Another effect that we'll see is the practice of simply idling land for a year. Wheat needs water as well as fertilizer and the places where it is raised are much drier than corn country. The land may be left "chemfallow", where weeds are killed with Roundup herbicide three times during the season, or it may be left summer fallow, where the weeds are periodically wiped out by mechanical cultivation. Both of these practices allow the soil to rest both in terms of water and nutrients. The Roundup method has the chemical cost and attendant concerns while the cultivation method is much more fuel intensive.
Why would land be left out of production? Cash rent on an acre used to be 120% of the price of ammonia but now it's 50% of that $1,000. This makes the choice very simple; half of the land is left standing idle in any given growing season, accumulating water along with the improvements associated with leaving the organic matter from the weeds on the field. The financial effect is the same as fertilization only without the attendant expense and risk.
Bryan Lutter of Producer's Hybrids puts it succinctly:
"Farmers can't afford a thousand dollars a ton, so they've cut back on ammonia. Wheat protein percentages will drop from 14% to 8%. People are going to starve."
Let's take a look at what this means to the global food supply. Here are the 2005 production numbers in millions of tons. There are six and a half billion of us and 626 million tons produced; this staple crop provides a little less than two hundred pounds of grain per capita.
China 96
India 72
U.S. 57
Russia 46
France 37
Canada 26
Australia 24
Germany 24
Pakistan 22
Turkey 21
Other 201
World 626
The U.S. has three hundred million people and consequently a net export of about half of our crop occurs, which means we're providing 25% to 30% of the global wheat need. Australia has a massive crop and a tiny population of ten million, Canada is in a similar situation, and historically their exports together roughly equal ours. The E.U. has a good share of global exports but I believe that is local trade and Russia manages a good bit of export, too.
The overall condition of Pakistan is worrisome but wheat production is a bright spot. Their imports are a tiny slice of their overall consumption and their cultivation practices are more traditional as opposed to intensive. A change in ammonia based fertilizer availability should have less of an impact there than it will for the other large consumers. India's production and consumption match as well, but they've been shedding ammonia plants at a scary rate and probably face the same protein deficit U.S. crops will have. China has a variable harvest and will take anywhere from nothing to ten percent of the global export stream or about ten million tons.
A quick look at the USDA's Economic Research Service report shows where the hammer will fall when wheat production drops.
One sees discussion of people "being priced out of the food market" in some energy and agriculture related venues but this graph really brings home what will happen when U.S. and Australian exports crater. That big, purple developing countries portion of the graph are the ones least able to tolerate changes in market conditions and they'll be the first to lose out when supplies are tight and prices are high.
The contributing factors do not just effect the United States. Australia has the same ammonia concerns as the U.S. and they're dealing with a very persistent drought.
So, this does not look to be a good situation. Two producers that make up fifty percent of exports are cutting back due to the impact of the natural gas market on ammonia production and one of them is in dire straights due to global warming. This is going to lead to food riots and governments falling among the developing nations.
(CODA:
This nasty graph, which just doesn't scale down well, was developed after this diary was originally written in the fall of 2008. The key thing to look at here is on the right - see the yield lines going up? See the per capita end of season stocks going down? The two curves match in shape but that counter-intuitive separation? That's the ethanol effect ... )
(DOUBLEPLUS CODA:
I worried over The Famine of 2009 so much that I got together with my co-conspirators from the Stranded Wind Initiative and we created a National Renewable Ammonia Architecture. And in my spare time I sleep.)