Friday, September 4, 2015

Forget Oil, Worry About Phosphorus


The Oil Drum Modern agriculture depends on phosphorus. But phosphorus supplies will soon be receding. Forget about the problems of peak oil. We should be worrying more about peak phosphorus.

Modern farming methods depend increasingly on fossil fuels and major plant nutrients: nitrogen, phosphorus, and potassium.

We know that peak oil is fast approaching, if it has not already arrived. This isn’t the only shortage that should concern us. We are seeing the same coming shortages in nitrogen, phosphorus and potassium.

Peak phosphorus is occurring along with peak oil. The earth’s supply of these critical resources is dwindling rapidly.

A New York Times writer recently said that phosphorus availability is “the gravest natural resource shortage you’ve never heard of.” The fact is, corporate and political control of essential plant nutrients may be the gravest long run competition issue you’ve never heard of.

And control of these resources may also be the greatest strategic issue facing the United States that you never heard of.

The country has an ambitious plan to replace imported oil with biofuels produced from plant matter. But dwindling U.S. reserves of the nutrients needed to produce biofuel feedstocks and political instability in countries where most phosphate rock reserves are held suggest that this plan may be replacing energy dependence with phosphorus dependence.

This is an issue for the world. The potential severity of phosphorus shortage has led Swedish researchers to proclaim that the global economy could flip from one that revolves around ownership of oil reserves to one based on who owns — and controls — phosphorus reserves.

The change could happen within ten to 20 years. 

Where do we get our fertilizer?

The United States is increasingly dependent on other countries for critical plant nutrients. Imports account for 57% of nitrogen and 86% of potassium fertilizers used in the U.S.

At present, our phosphorus fertilizer needs are met from domestically mined rock phosphate. About one-half of this country’s production of phosphorus is exported, primarily to China, Australia, Canada, Brazil, and Mexico. Morocco is the Saudi Arabia of phosphorus.

Nitrogen is made from natural gas. So nitrogen imports come from Trinidad, Tobago, Canada and Russia because these countries have low natural gas prices. Potassium comes from Canada and Russia.

King Phosphorus

Of these natural resources, phosphorus is the most critical to the world’s food security. Phosphorus is necessary for all living matter —  plants, animals, humans, bacteria, and all other kinds of critters. Humans get phosphorus from plant and animal food products. 

From a practical standpoint, phosphorus is neither created nor destroyed, but it does change form and location. Phosphorus removed from fields in plant material must eventually be replaced to avoid food and plant biomass yield decreases.

Modern agriculture is very wasteful of phosphorus. It is flushed down toilets and lost from farm fields through erosion and runoff.

Factory farming has concentrated livestock and poultry production, thereby concentrating waste production in the same areas. Livestock and poultry waste contains nitrogen, phosphorus and potassium and is a valuable fertilizer. Foreign Policy Agriculture now depends on phosphorus as a plant nutrient, a relatively recent phenomenon.

But this waste isn’t spread around. It is heaped up in particular areas. There is enough poultry waste produced each year in the Illinois River valley in northwest Arkansas to cover a 115 mile two lane highway from Tulsa to Fayetteville to the depth of 18 inches.

Meanwhile, improper application to land or over application can cause environmental problems. 

Runoff often results in problematic algae blooms—"pond scum" to rural folks--in tanks, lakes and rivers. Phosphorus from livestock waste collects in sediments at the bottom of ponds, lakes and rivers, but recovery of this phosphorus from either human or animal sources is expensive.

Who will control the supply of fertilizers?

Morocco and China have 60% of the world’s estimated phosphorus reserves. South Africa, Jordan and the U.S. have smaller deposits. At present consumption rates, world reserves will be depleted within a century.

The U.S. supply will be exhausted in 15 to 30 years.

China has imposed a 100-175% tariff to curtail phosphorus exports, yet the U.S. continues exports to China. Without changes in farming systems to reduce or eliminate phosphorus waste, the United States will be dependent on politically unstable countries for phosphorus. 

Fertilizer cartels

The world’s fertilizer industry has a long history of government or corporate cartels. These cartels have agreements (either tacit or explicit) to fix prices at artificially high levels and to divide the market.

Between the world wars, 90% of phosphate rock exports were controlled by cartels. And cartels still dominate fertilizer reserves and trade.

China’s export taxes effectively take that country out of the world market, leaving phosphorus mined in the United States and Morocco as the major sources. Trade in phosphorus is dominated by three corporations: Mosaic (Cargill), Potash Corporation of Saskatchewan, and OCP. Cargill and Potash Corp. have annual fertilizer sales of about $20 billion annually, while OCP has annual sales of phosphorus of around $10 billion. 

Potash Corporation of Saskatchewan was formed as a Crown Corporation by the Saskatchewan government in 1975 but was privatized in 1989, becoming a publicly traded corporation. Potash Corp. also has substantial stock holdings in other fertilizer companies. It owns 14% of ICP (Israel, Spain, UK), 28% of APC (Jordan), 32% of SQM (Chile), and 22% on Sinofert (China). Foreign Policy As phosphorus has come under the control of a handful of firms, its price has increased.

Cargill owns or controls over 30% of the U.S. reserves of phosphate rock, while Potash Corp. has 50% of domestic reserves. 

OCP is a Moroccan-sanctioned, privately traded monopoly that controls practically all of the reserves in Morocco and the Western Sahara.  OCP deals exclusively in phosphorus, while Cargill and Potash Corp. also manufacture nitrogen and mine potassium.

Three company control

Having only three transnational companies — Cargill, Potash Corp., and OCP — control reserves and trade for a critical input to food production is alarming. But the political and economic control of these products is even more troubling.

Cargill and Potash Corp. form an export cartel, PhosChem. It’s interesting that PhosChem was organized under the 1918 Webb-Pomerene Act that was intended to help small American businesses engage in collective export sales. It was a way for small firms to countervail the power of foreign governments.

But Cargill is the world’s largest privately held corporation, and Potash Corp is a Canadian company. Neither is “small” nor is Potash “American.” Yet they continue to be given antitrust immunity under the antiquated W-P Act. (For more on the potash cartel, see this recent New York Times article.)

Troubling, ain’t it?

But there is more. Canada sanctioned a potash export cartel, Canpotex, whose members are none other than Potash Corp. and Cargill, joined by Agrium. Agrium is the 6th largest fertilizer company in the world and, by the way, has small phosphorus holdings in the U.S.

The world’s potash reserves are primarily in Canada and the former Soviet Union. In the last few weeks, a Russian billionaire has been working on a deal to merge the two Russian potash companies, Uralaki and Silvinit, and the Belarusian company, Belaruskali. All of these mine potash. The reason given for merging these companies is “so they won’t have to compete with each other,” which “will be worth billions.”

In the last few weeks, BHP, Ltd, the world’s largest miner, made a hostile bid of $38.5 billion for Potash Corp. The Russian deal and the hostile takeover of Potash Corp., if they happen, will further consolidate mining and market power for basic natural resources.

Bottom line: World trade in potash fertilizer may be dominated by two entities, Canpotex, a Canadian cartel, and the conglomeration in the former USSR. World phosphorus trade is already dominated by PhosChem, a U.S. sanctioned cartel, and OCP, a Moroccan sanctioned monopoly.

Troubling, ain’t it!

Commercial agriculture, as practiced for the past 50 years, is not sustainable because it depends so heavily on diminishing supplies of fossil fuel and mined fertilizer.  Furthermore, control of critical inputs to food production by a few giant transnational businesses and politically unstable governments is unacceptable. Monopoly is bad.

The countries of the world must begin meaningful discussion about what kind of food production system and food economy are best for humanity. Those with narrow political interests or the selfish few corporate executives and their puppets should not prevail in developing a new food system. 

C. Robert Taylor is Alfa Eminent Scholar and Professor of Agricultural Economics at Auburn University.


Nitrates and Phosphates

Nitrate and phosphate production and concentration was considered essential to recover post WWII nations and also in Cold War strategies. Recovery of nations was linked to recovery of food supply and fertilizers resulted in a lot more with not much more effort.

There have been disastrous side effects spanning the history of fertilizer discovery and production. These include devastations to entire towns in Germany and the United States. The devastation at Texas City became a primary reason for industrial accident preparedness, but this did not help my home town of Texas City until years after the disaster. One intriguing book about the Texas City Disaster of 1947 highlights the US decisions dating back from Truman to the disaster and to the federal tort cases after the disaster - compelling but few were willing to blame the federal government for various activities. City on Fire: The Explosion That Devastated a Texas Town and Ignited a Historic Legal Battle

My first rural hospital administrator was training as a funeral director 45 miles away in Houston in 1947 and felt the blast and was called down to process some of the hundreds that died. We met later in Nowata OK.

I happened to benefit from the rebound economic and spiritual recovery of the city as the industries and people from TC and surrounding areas pitched in to rebuild the complex and the town. Texas City remains essential in petrochemicals just as it was essential in these areas and in tin smelting, rubber substitutes, and phosphate production.

Previous methods of disposal (and some current ones) could use improvement. For example many of the piles awaiting disposal or past disposal sites, are in hurricane prone areas from Texas to Florida.

Sometimes corporations make poor decisions. One bought some prime industrial property in Texas City, a former fertilizer plant. They did not do their homework as the area is laced with radioactivity. Since this was previously known, their lawsuit did not change ownership or responsibility.

My father, a chemical engineer, helped design containment of radioactive and other wastes along with chemicals such as benzene that have pooled under the plant area. My first day working in the plants resulted a call that night to report to the Emergency Room for evaluation and decontamination - seems someone forgot to remove some hazardous catalysts before we went in to blast out the pipes. A summer in the plants and a couple of weeks assisting a bricklayer convinced the basketball coach that I had bulked up enough, but also convinced me that college education was a really, really good idea. I completed my chemical town (Beaumont) education at Lamar University and married my chemical town wife from Pasadena.

The article about phosphates was interesting as I had little idea about the source of the radioactivity. I had assumed radioactive phosphorous but this lasts milliseconds to days, so naturally existing phosporous has little radioactivity. It is the guilt by association with other radioactive elements that is the problem as noted well. These have longer half-lives that are of concern and the processing tends to concentrate them. The benefits for billions can have consequences for a few thousand, especially if care is not taken to spread the cost of proper disposal and prevent harm.

Perhaps if developers of property subdivisions can now insert clauses that give them 1% of the sales price paid to them for 99 years, we can as a nation go back and recover for the consequences of failure to protect up to 99 years later. By the way, the Texas City disaster resulted in 17 million in claims over 50 years ago.

Robert C. Bowman, M.D.