Over the past several decades farms i have decreased in number, increased in size, and skyrocketed in efficiency. This efficiency gain has largely been driven by the increase in fertilizer use. In 1960, American farmers were using 7.3 million tonnes of nutrients, roughly evenly split between nitrogen, phosphate, and potash fertilizers. By 2012 this figure had more than tripled to 22.5 million tonnes of nutrients, more than half of which was nitrogen, with the remaining half being roughly equally phosphate and potash.
When nitrogen is used as a fertilizer, it is used in the form of ammonia (NH3). When ammonia is produced on an industrial scale, it is done so through the Haber-Bosch process—hydrogen is derived from natural gas (or coal or oil), nitrogen is derived from the air, and the two react with the help of catalysts, high temperature, and high pressure.
Ammonia production demands a significant and steady supply of fossil fuels. According to a 2004 study, 1.2 percent of global energy is consumed by the fertilizer industry, which is responsible for about the same share of greenhouse gas emissions. In countries like China, where ammonia production relies on coal, rather than natural gas, the contribution to emissions can be substantial.
The good news is that ammonia production has become much more efficient over time. Energy consumption by ammonia plants today is less than half of that of those in the 1960s. As a result, some of the more efficient plants in the world can actually be found in developing countries, where they have been built more recently.
Pesticide plants require energy to facilitate the necessary chemical reactions, storage, packaging, and transport of chemicals. Because fossil fuels are not as critical an input as they are for fertilizers, the pesticide industry’s energy footprint is smaller. However, pesticides do contribute to emissions, and historically have done so to a devastating degree. Many harsh pesticides that were produced for the first half of the 20th century have since been banned, following research regarding their harmful emissions of ozone-depleting volatile organic compounds (VOCs), as well as their potentially serious impacts on human health.
In terms of irrigation, the amount of energy required depends entirely on the type of system in place. Those that are relatively simple and rely on rainwater, such as ditch and terrace irrigation systems, do not require any energy other than human labor. However, when water is extracted from an underground aquifer or from a distant source of surface water, pumps are utilized—and the engines of these pumps rely on diesel or electricity. However, companies are increasingly developing solar-powered irrigation pumps, reducing the dependence on finite and expensive energy resources.
In the United States (US), the most energy-intensive aspect of agriculture is tied to the operation of on-farm machinery such as tractors, harvesters, and similar equipment. These operations account for approximately 600 trillion British thermal units (Btus) of energy annually. The second-highest consumer of energy on American farms is fertilizer, at about 500 trillion Btus of energy annually. Third highest is electricity, which uses just under 400 trillion Btus of energy, primarily in temperature maintenance for livestock dwellings, dairy production, and irrigation pumps. And fourth are pesticides (which includes herbicides, insecticides, and fungicides), the production and packaging of which require energy.
Modern agriculture’s dependence on energy means that the price of food is directly dependent on the cost of energy. And this interdependence may be growing- the share of energy in American corn production cost increased 27 percent in 2001-2005 and 34 percent in 2006-2011.
When fuel costs are high, farmers tend to shift towards practices that are less energy-intensive. But this slight shift in practices is usually not enough to absorb a fuel price increase, and costs are ultimately transferred to consumers. Unfortunately, the impact of a decrease in the cost of oil on food prices can be less pronounced than an increase—or, at the very least, the impact from a decrease can have a several-month lag. American consumers are now seeing the impact of cheaper oil in grocery stores, but this is not a benefit shared by all consumers universally, nor does it apply to all commodities. In places where agricultural practices are more simple and less energy-intensive, lower oil prices do not mean much for the cost of production—it’s only the price of imported agricultural commodities that is pushed downward.
Agriculture should be constantly striving towards energy efficiency by discovering ways to use less energy and more ways to use cheaper and renewable energy inputs. In the US, on-farm energy use is massive, but beginning to decline slightly. However, without financial or legal incentives to make changes, it is unlikely that less polluting practices will take hold in industrialized countries like the US. In total, agriculture uses 1,600 trillion Btus of energy annually, with the same emissions as the energy use from 11 million homes.
In developing countries, the high cost of agricultural inputs means that farmers often cannot afford to use them at all.
In the case of fertilizer, for example, prices in Africa are driven up because such inputs are imported—typically shipped over long distances and then ferried inland by trucks and trains. There are a few exceptions—North Africa, for instance, produces significant amounts of fertilizer, as does South Africa. Modestly-sized plants do exist in Zimbabwe, Mali, Senegal, and Nigeria, but these small facilities are not enough to displace imports. Africa spends more than $5 billion each year bringing in fertilizer from around the world.
But several investors in a handful of countries across the continent are working to change that narrative. Fossil fuels—especially natural gas—are vital ingredients in the production of fertilizer. And natural gas happens to be a commodity that is plentiful in Africa.
Nigeria’s combined oil and natural gas reserves are the largest in Africa, and the hydrocarbons industry is the backbone of the country’s economy. Nigeria is one of the top exporters of liquefied natural gas (LNG), and yet the commodity’s vast potential in electricity production, as an energy source for cooking, and as feedstock in the production of fertilizers has hardly been tapped into. Investors are increasingly aware of the country’s petrochemical and fertilizer potential, and are working to build facilities that take advantage of Nigeria’s natural resource wealth.
Since its 2005 acquisition of the National Fertilizer Company of Nigeria, Notore Chemical Industries Ltd. has been the most important player in the country’s fertilizer sector. Through this acquisition the company gained possession of Sub-Saharan Africa’s only urea fertilizer plant, which had been constructed in the late 1980s. In 2010, the plant was rehabilitated and its capacity expanded to 500,000 tonnes of urea. In 2012, the firm announced its intentions to develop new ammonia, urea, and petrochemicals projects at the existing facility. The $1.3 billion joint venture with Mitsubishi will produce 1 million additional tonnes of urea and one million tonnes of nitrogen, phosphorus, and potassium (NPK) products.
Also active in the country’s petrochemicals space is Indonesia-based Indorama, whose plans to construct Nigeria’s largest fertilizer plant were approved by the government in 2011. The $1.8 billion facility, which is expected to begin operations by the first quarter of 2016, will produce more than 1.4 million tonnes of ammonia and urea fertilizers.
Nigeria currently spends hundreds of millions of dollars importing fertilizers each year. Once these projects come online, not only would Nigeria no longer have to import fertilizer, but the country could also start exporting products to the rest of the region and beyond.
Over the past several years, the warm waters of the Indian Ocean have been a major focus for the oil and gas industry. Companies have discovered that Tanzania and Mozambique have massive offshore natural gas deposits, and excited investors are now scrambling to extract these resources. Moreover, some of this scrambling has been motivated by fertilizers. The Mozambican government has expressed its intention to build fertilizer manufacturing plants, and the Indian government had extended an offer to build such a facility in exchange for natural gas at “concessional rates.” Just north of Mozambique in Tanzania, a multi-company partnership between Danish firm Haldor Topsoe, German-based Ferrostaal Industrial Projects, Pakistani Fauji Fertilizer Company, and the Tanzania Petroleum Development Company (TPDC) will develop a $1 billion fertilizer facility in the country. The plant is expected to be operational by 2020, and is expected to produce 1.4 million tonnes of fertilizer annually. To put that in perspective, according to the International Food Policy Research Institute (IFPRI) farmers in the country consumed less than 300,000 tonnes of fertilizer in 2011/12.
In Ethiopia, Norwegian chemicals giant Yara recently confirmed the potential of potash mining in the country’s remote northeast. The company, which has been backed by the Ethiopian government in its potash explorations, is hoping to begin producing potash by the third quarter of 2018.
While these budding projects should make fertilizer much more affordable and accessible to African farmers, in order to make the cost of these inputs sustainable and cheap they will have to prioritize efficiency. Firms that are building these new plants have an advantage in this regard—scientific advances have made production methods much more efficient than they were several decades ago. But as governments throughout the region continue awarding petrochemical and fertilizer contracts, they should prioritize efficiency and always acknowledge the finite nature of their resources.
Fertilizer application and the use of other inputs certainly aids in crop yield increases, but it is important to optimize the use of such inputs. For fertilizer, that means testing soil in order to understand what nutrients are necessary in a particular area, strategically timing fertilizer applications, and rotating nitrogen-depleting crops with nitrogen-fixing ones, like legumes. For pesticides, that means more precise application methods, as well as good agricultural practices like crop rotation and optimal crop spacing that can reduce the amount of pesticide needed.
In order for Sub-Saharan Africa to sustainably and continually reap the benefits of modern agriculture, regional governments will have to encourage investment in their input industries while also keeping in mind the importance of efficiency.