Global Urea Crisis: What is it?

Article by: Hari Yellina (Orchard Tech)

Due to the global shortage of urea, the prices are soaring to levels not seen in over a decade. In this time of shortages and inflation worries, that alone might not sound too surprising. However, urea links up to several disparate-looking strands of global economic disruption, showing how easily extreme weather and shipping turmoil can cause supply shortfalls to radiate. People and industries of all kinds are feeling the shocks. In India, a lack of urea has made farmers fear for their livelihoods. In South Korea, it meant truck drivers could not start their engines.

Urea is an important type of agricultural fertilizer, so rising prices could ultimately mean higher costs at dinner tables around the world. The United Nations Food and Agriculture Organization’s index of food prices is already at its highest level since 2011. The coronavirus pandemic has caused huge numbers of people to face hunger, and increased food prices could cause even more to have trouble meeting basic dietary needs. Prices of two other widely-used plant foods are skyrocketing as well.

One big reason for surging fertilizer prices is the surging prices of coal and natural gas. The urea in your urine is produced in the liver. The industrial kind is made through a century-old process that uses natural gas or gas derived from coal to produce ammonia, which is then used to synthesize urea. China and Russia, two of the biggest producers, have restricted exports to ensure supplies for their own farmers. In China’s case, an energy crunch led some areas to ration electricity, which forced fertilizer factories to slash production.

Hurricane Ida drove several large chemical plants to suspend operations when it tore through the U.S. Gulf Coast in August. Western sanctions on Belarus have hit that nation’s production of potash, the key ingredient in another fertilizer. Port delays and high freight fees — plant food is bulky stuff — have added to costs. Therefore, until this crisis is properly dealt with, the global urea shortage will haunt all industries.