The hidden variable ...

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It's not just oil ...

47,900,000 Americans went hungry last year. The USDA counts a household as food insecure when its members cannot reliably access enough food to eat. In 7.2 million of those households, someone skipped a full meal or went an entire day without eating because there was no money. 14 million of them were children.

On February 28th, the United States and Israel bombed Iran.

Within 48 hours, Iran closed the Strait of Hormuz, a 21-mile-wide channel between Iran and Oman through which 20 percent of the world’s oil travels every single day.¹ A third of the world’s fertilizer travels through that same strait.² And it needed to arrive this month. The planting window does not wait so timely delivery is unwaveringly critical within the planting window.

Here is what nitrogen does to a corn plant. Applied at the right moment in the growing cycle, it drives the plant to produce grain. Cut the application in half and you do not get half a crop. The corn plant runs out of nitrogen mid-growth and stops producing. Farmers across the Northern Hemisphere are making their nitrogen purchases right now, ahead of spring planting. The ships carrying that nitrogen are anchored on the wrong side of a closed strait, or rerouting around the southern tip of Africa, adding weeks to delivery schedules and close to a million dollars in additional fuel costs per voyage.³

End game

There is no strategic reserve for fertilizer. The United States maintains a Strategic Petroleum Reserve for oil. There is no equivalent for nitrogen.⁶ When the supply runs short, farmers absorb the price, reduce their application, or switch crops. The harvest pays for it in the fall.

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