Amidst the heaves of soil and rows of crops that fill farm fields around the globe, a game of cat and mouse is playing out.
The best way to measure the score is via the stock market, which has been recording an unprecedented crumpling of profit among the world's largest sellers of farm fertilizers – the result of a diet cash-strapped farmers have imposed on their crops.
Fears over the impact this battle could have on an already hungry planet deepened this week when PotashCorp, the Saskatchewan-based company that is the world's largest supplier of potash, an expensive but essential crop nutrient, reported an 80-per-cent profit plunge. Next, the Calgary-based fertilizer company Agrium warned that its own third-quarter earnings could be even worse, down 90 to 95 per cent from last year.
For farmers, the numbers are powerful signs that their decision to wean crops onto lower amounts of fertilizer until the industry drops its prices, which skyrocketed to record highs last year, is registering impact. The question is how long they – and by extension, the global food supply – can avoid suffering side effects, such as reduced yields.
“Growers are doing what they need to do to stay above water, and that is they're collectively trying to influence the market with their buying behaviour,” said Dave MacKay, president of the Canadian Association of Agri-Retailers, which represents about 1,000 Canadian fertilizer dealers. “This is the reality of a commodity market. It's ruthless,” he said, adding: “They can only play this game so far before it will impact their bottom line.”
He noted that farmers scored a recent success in driving down the prices of nitrogen and phosphate, two of three key fertilizer ingredients, by strictly limiting use for a year. Whether they can do the same with potash, which nourishes soil with potassium and chloride and is produced by a small number of agri-industry giants, will hinge not only on the strength of their resolve, but on the fertility of their soil.
“Think of a nutrient budget like a financial budget,” said Don Flaten, a soil science expert at the University of Manitoba. “If you've got a relatively large savings account and you're taking a little bit more out than you're putting back in, you can get away with that in the short term,” he said. “But if you continuously remove more than you replace, eventually you run out.”
Fear that will happen is exactly what companies like PotashCorp are banking on.
“Food production is too important to put at risk,” the company's CEO, William Doyle, told analysts this week. “Farmers know this and they will start feeding their soil again. The question is not if it will happen, but when the rebound will begin.”
Mr. Doyle has been warning for months that the under-application of chemical fertilizer all over the world will have dire consequences for the world's food crisis, which he argues has been overshadowed by the global economic implosion. His company's research has measured decreased yields in Brazil, Argentina and China, which is the world's largest importer of potash.
Soil experts argue that a year's worth of fertilizer reduction is unlikely to have a dramatic impact on global yields, and by extension, hunger.
However, some argue farmers don't have a lot of wiggle room. Global food insecurity is already hovering at dangerous levels. A recent United Nations report put the number of the world's hungry at 1.02 billion – the highest number recorded in four decades, since the UN began collecting statistics.
In addition, the UN's Food and Agriculture Organization is forecasting global population growth from its current 6.8 billion to more than nine billion by 2050, which will necessitate a doubling of food production in developing countries.
While there are alternatives to chemical fertilizers those countries can turn to, none are as efficient. Mr. Doyle is banking on the fact that farmers in the developing nations that have become lucrative markets for his company will need to come back to potash if they're going to feed all those people on a limited supply of land.
“The future value of our product is clear,” he told analysts, imploring them to be patient.
Were he alive, at least one lauded expert would undoubtedly back Mr. Doyle up.
In an interview with The New York Times last year, Norman Borlaug, a now-deceased American scientist who was awarded a Nobel Peace Prize in 1970 for his role in spreading intensive agricultural practices to poor countries, said there is only one remedy to feeding 6.6 billion people, the global population at the time.
“Without chemical fertilizer, forget it,” he said. “The game is over.”
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