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The Truth about Trade

RSS By: Dean Kleckner, AgWeb.com

Dean is Chairman Emeritus of 'Truth About Trade & Technology, a nonprofit advocacy group led by a volunteer board of American farmers.

Energy Policy 101

Jan 30, 2009
So much for global warming: The winter of 2008-09 is shaping up as the coldest in about a decade. The Chicago Tribune reports that home heating use has risen by more than 20 percent in the Windy City.
 
Chicagoans should be glad they don’t live in Eastern Europe. Earlier this month, Russia shut off its supply of natural gas, ostensibly in a dispute over prices with Ukraine. For about two weeks, hundreds of thousands of homes and factories lost heat. And in Ukraine and Romania, production of nitrogen fertilizer – which uses natural gas as its main ingredient – practically came to a grinding halt.
 
The rest of us ought to pay close attention, because volatility in the energy markets not only threatens to give us the chills--it also endangers fertilizer supply and therefore our ability to produce crops at a time when putting food in our bellies costs more than ever.
 
We know that the United States needs a comprehensive energy plan. “We will harness the sun and the winds and the soil to fuel our cars and run our factories,” promised President Obama in his inauguration address last week.
 
We hope to harness the sun with solar panels and the winds with giant turbines. We can harness the soil, too, by planting crops that will be used to produce biofuels.
 
But the effort to produce biofuels requires fertilizer--something that our crops must have in order to grow. These crops include everything from the sweet corn we eat in the summertime to the switchgrass we hope to convert into a dynamic source of energy. And production of fertilizer, in turn, requires natural gas.
 
The bottom line is that any serious effort to develop an energy plan must consider natural gas and its important role in ensuring the American farmer’s ability to buy and use fertilizer.
 
Fortunately, the Russians can’t shut off a natural-gas pipeline to the United States, as they did with Europe. We don’t depend on Russian natural gas. If we did, the Russians would try to intimidate us with this blunt weapon every time our leaders disagreed over Russian aggression in Georgia or American anti-ballistic missiles in Poland. We have our own sources of natural gas.
 
This apparent benefit masks an even greater vulnerability, however.   Although nearly 80 percent of all U.S. nitrogen fertilizer demand was once supplied by plants within our borders, today only 40 percent of U.S. nitrogen needs can be supplied by our own producers. Our heavily increased reliance on foreign supply is due in part to the decision of foreign governments, including Russia, to subsidize their fertilizer producers or the gas they use to make it. This has made it harder for U.S. producers to compete, and many have gone out of business. 
 
As a result, U.S. farmers like my brother Joe and I are heavily dependent on fertilizer made elsewhere and imported by conventional methods of commodity transportation--an approach that’s sensible given our limitations, but one that also imposes unique challenges and risks. Responding to this challenge requires a sound energy policy and adherence to fair trade principles to ensure we do not become even more dependent on foreign supply.
 
The fertilizer industry is acutely aware of the global nature of its business. U.S. fertilizer producers compete globally with foreign producers having access to lower cost gas, yet have remained reliable suppliers during the recent period of tighter global supplies.  My farm and others like it must be able to depend upon these reliable suppliers who are dedicated to serving the U.S. agricultural community
 
The challenge to ensure a reliable and affordable supply of fertilizer will take more than sound corporate strategies. The Obama administration must embrace an energy policy that recognizes the importance of natural gas to fertilizer and fertilizer to crop production. A comprehensive energy plan must also ensure continued access to fairly traded imports while discouraging foreign protectionist measures that restrict export supply. This will mean maintaining positive trade ties with producing countries. It will require a foreign policy that encourages political stability in sub-Saharan Africa, which will be a crucial source of fertilizer ingredients in the 21st century.
 
Finally, it will demand a willingness to ensure adequate natural gas supplies by drilling along our coasts as well as in the American outback--an approach to domestic production that mixes the imperative of conservation with the need to make the fertilizer that helps us grow our food and fuel. Thankfully, modern technologies can allow both industry and the environment to flourish.
 
A few months ago, Obama corresponded with Norman Borlaug, a Nobel Peace Prize recipient who is widely known as the father of the Green Revolution. Obama would do well to listen to what Borlaug told the New York Times last spring: “This is a basic problem, to feed 6.6 billion people,” said Borlaug. “Without chemical fertilizer, forget it. The game is over.”
 
For Obama, the presidential game is just starting. A healthy crop needs a good fertilizer to grow--and a successful Administration will want a smart energy policy that makes sure American farmers have what they need in order to produce what they must.
 
Bill Horan grows corn, soybeans and grains in Northwest Iowa. This fourth generation family farm has been involved in specialty crop production and identity preservation for over 20 years. Mr. Horan was appointed to the USDA Renewable Energy Committee and serves as a Truth About Trade & Technology Board member. www.truthabouttrade.org
 
 
 
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COMMENTS (1 Comments)

Matt Bogard
Great Post! Many Americans can't see past solar panels and hybrid cars when it comes to energy policy. This is a great anecdote to that sentiment.
12:05 PM Jan 31st
 

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