The P Word: Food for thought…
Society is three meals away from revolution. It is a quotation of uncertain origin but more definite outcomes. Deprive a culture of food and civilisation quickly crumbles.
The food we all eat is made by a highly efficient global agricultural industry. Crops have been carefully selected over the years to give most of us, in the richer parts of the world, palatable platefuls whenever we want.
Food crops generally need good soil, a favourable climate with warm air and water. They also need a myriad of nutrients; chemicals that help plants and animals grow and provide us with vital ingredients for our healthy growth. Some nutrients are more important than others. The big three are called NPK macronutrients and without these plants cannot grow. These three letters refer the chemical symbols of Nitrogen, Phosphorus and Potassium.
Of these three elements phosphorus is arguably the critical nutrient being a key component of DNA. We couldn’t even build our bones without phosphorus.
Phosphorus is vital for our global food production. It must be added to the land to make food crops grow. Plants and animals consume the phosphorus and we in turn consume them. Modern agricultural techniques rapidly exhaust the natural levels of phosphorus in the soil. This means that phosphorus needs to be purchased regularly and added to the land. Given this dependency it is interesting to ask the question; where does it come from?
Phosphorus occurs naturally in the earth as phosphates, concentrated in sediments that were created by biological activity or in rocks created by volcanic activity. Whatever the origin, the phosphorus must be mined. Agriculture as we know it cannot exist without this mining activity. 90% of this phosphorus is mined for use in agriculture.
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Many countries around the world, notably China, the USA and Morocco, produce phosphorous.
The production figures show that China and the USA are the biggest two producers.
That is not the full story. These two nations mine phosphate rock primarily for their own consumption and when one looks at the exports and imports at the global level a different pattern emerges.
Africa, (principally Morocco), is the largest exporter of phosphate rock to the world with East Europe / Central Asia and West Asia, (Russia, Jordan, Syria and Egypt) accounting for much of the rest.
Western Europe is uniquely vulnerable – has little or no natural reserves of phosphorus and is entirely dependent on imports, mainly from Morocco and Russia. It will come as no surprise that phosphorus is on the European Union’s risk radar.
At this point, dear reader, you are probably expecting me to introduce a looming scarcity of this most essential of life’s components. Some authors do raise the possibility of peak phosphorus during the 2030s and this is certainly worth exploring. Other authors question the peak argument. The difference of opinion is partly caused by some world reserves being reported only in terms of ore and grade, not as marketable phosphate rock. The picture is further complicated when one considers that the amount of marketable phosphate rock has an economic component and this assessment of viability is constantly changing with the market price.
So, while there is some uncertainty about how much phosphorus will be available in the longer term (measured in decades) there is also reason to draw your attention to the shorter term (measured in years). This is because while there seems plenty of phosphorus in the ground, it is not evenly distributed.
Let’s look at who has how much of the stuff in their territory.
Now we can see the true nature of the unequal distribution of phosphorus reserves around the world. 75% of the world’s store is located in Morocco.
This is evidently not a problem. Global trade activity seems to be managing this disparity quite well getting the materials to parts world that need it from those who have it – at an affordable price.
Thinking ahead, the issue on the horizon could be an interruption in supply caused by political instability in these countries. This would create price shocks in the market that really would affect all of us.
So how stable is the largest exporter of phosphate rock? The Economist Intelligence Unit keeps an eye on these things. The answer appears to be stable and in control. The government has brought in limited reforms that have helped it weather the Arab uprisings. However unemployment is high, particularly among the young educated urban population. The Economist notes that last year in a country of 33 million people only 21,000 new jobs were created.
Keep an eye on happenings in this part of the world; the ripples of change could reach us all. In its report the USGS notes, “There are no substitutes for phosphorus in agriculture”.
Adrian Nixon is a Senior Editor at InvestorIntel. He began his career as a scientist and is a Chartered Chemist and Member of the Royal ... <Read more about Adrian Nixon>