The theory known as “Peak Oil” became popular a few years ago when mainstream media outlets caught on to the concept that there was a finite supply of crude oil in the earth and at some point production would reach past the pinnacle.

Today, a similar theory is being applied to the fertilizer industry: “Peak Fertilizer.” This concept is gaining strength in the agriculture industry and could have significant ramifications for the industry.

Like the “Peak Oil” theory, “Peak Fertilizer” theory is also based on reaching the pinnacle of the production curve.

In the past year, more stories and articles have been popping up claiming that the world is going to run out of phosphorus in the next 20 to 30 years. A recent blog said, “In 2007, Canadian physicist Patrick Dery attempted to apply M. King Hubbard’s work on peak oil to rock phosphate and came to the conclusion that world production actually peaked in 1989. Unlike gas and oil, there are no mineral substitutes for phosphorous. Without phosphorus, plants become ‘phosphorous limited,’ constraining production no matter how many other nutrients can be supplied.”

One could argue the shortage speculation is really an attempt to raise prices artificially by instilling fear into the market. Regardless of whether that is the intent or not, fear may be creeping into the ag industry’s consciousness. What’s interesting is that more often than not, it’s the environmental and “green” blogs that are writing about a coming fertilizer shortage. They are the same ones complaining that use of commercial fertilizer is degrading the environment.
So-called green groups are cleverly using the shortage concept as a way to push for a return to older methods of farming. Claiming that phosphate production is past peak in North America, they are making the push for a return to manure. They also claim that in a post-peak world, organic production will become more competitive, the “green revolution” will end—forcing developing nations to shift back to traditional crops and rotations, food will cost more and commercial composting will become valuable.

Other forecasts say the world “Peak Phosphorus” production is yet to come. According to The Soil Association's report, "we may hit 'peak' phosphate as early as 2033, after which supplies will become increasingly scarce and more expensive."

By 2030, the United States is not likely going to be in a good negotiating situation for acquiring fertilizer supplies. Production and demand continues to expand outside of North America. According to another blog, “most of the world’s phosphate production comes from China (37 percent), Morocco and the Western Sahara (32 percent), South Africa (8 percent), and the United States (7 percent). Potash is obtained by mining potassium salts primarily located in four countries: Canada (53 percent), Russia (22 percent), Belarus (9 percent) and Germany (9 percent). As demand outstrips supply, these countries could form the fertilizer equivalent of OPEC, or even reduce their exports to save supplies for their own crops.”

Fertilizer production in the U.S. has already dropped in recent years, said Steve Wilson, president and chief executive officer, CF Industries, while speaking to attendees of the Agricultural Retailers Association’s 2010 annual convention and expo held Nov. 30 through Dec. 2. Wilson noted that North American fertilizer plants closures rose in the past few years. Twenty-five plants closed, leaving 42 percent less capacity than in 1999. He said those plants were not expected to come back up. This will leave the U.S. to become more dependent on fertilizer imports, leaving our market vulnerable to the supply fluctuations, political and transportation challenges and price volatility.

So, regardless of whether fertilizer production has reached its global peak or not, fertilizer retailers will need to plan accordingly in the next five to 20 years to handle this dramatic change because what is certain is that fertilizer production in North America has already passed its peak.

By Colleen Scherer, managing editor, AgProfessional