Is fertilizer controlled by a cartel every bit as fiendish as OPEC? Well, obviously - according to some observers. Although I have a hard time equating Canadians with Arab sheiks, the concentration in this industry certainly makes the concept of an "OFERTEC" possible, if not likely.
Those who oppose industrial agriculture think this is yet another reason to question our agricultural system. And frankly, looking at fertilizer costs for 2009, I think a few more farmers will be listening to this kind of populist advocacy.
I can think of few things more taken for granted in modern post-industrial society than fertilizer. Few people know people know what fertilizes the fields that produce the food they eat -- fewer, I'd bet, than know the source of their drinking water or electricity. To modern consumers, all of these things appear as if by magic.As more of us contemplate the amount of money we are going to scatter on our acres, even high prices (which we fear could disappear overnight) seem barely enough reward to climb that risk mountain. For farmers in the developing world, the anger is intense, as they have just arrived at the blast-off point for ag production only to see apparent price-gouging.
But with food prices hovering at elevated levels and hunger protests simmering in the global south, stuff like fertilizer is suddenly front-page news. The Wall Street Journal uncorked a doozy the other day. Did you know that dominant fertilizer giants like Mosaic and Potash Corp. of Saskatchewan -- the ones I'm always writing about -- are organized into OPEC-style cartels and legally allowed to collude on price? I didn't. [More]
With the prospect of earning record prices for corn, wheat and soybeans, farmers globally are trying to increase output. To do that, they need more fertilizer.It looks to me like about 3-4 tense years before supply begins to catch up to demand. More investment is puring into fertilizer production and the profits are certainly high enough to induce supply boosts.
But high prices and record profits have exposed serious tensions. Indian leaders this week accused suppliers of acting in tandem to drive prices abnormally high. Rising fertilizer prices, they allege, will imperil global food security.
It is a devastating charge. Fertilizer, after all, is a commodity like no other. Without it, there wouldn't be enough food to feed 40% of the world's people.
"You can wait for steel, you can wait for aluminum, you can wait for power," says Dr. U. S. Awasthi, managing director of Indian Farmers Fertilizer Co-operative, who alleged "cartelization" by suppliers this week. "But can you wait not to have your meal?" [More]
Cartels are eventually self-defeating, but the "eventual" part can seem like forever if you're stuck on the other end. And the politics of the day likely ensures official scrutiny.
But c'mon - being scammed by a Canadian? Aren't there any good guys left?