Global supply chains impact nearly every aspect of our daily lives; from the food we eat to the fuel in our cars. If the COVID-19 pandemic taught us anything, it’s how vulnerable and critical these supply chains really are. One of the most vital—and often overlooked—components of this system is the nitrogen supply chain, especially within agriculture.
Nitrogen is a fundamental element for plant growth and is an essential ingredient in fertilizers used worldwide. Although the air we breathe is composed of approximately 78% nitrogen, this atmospheric nitrogen isn’t directly usable by plants. Instead, it must be converted into reactive forms like ammonia, urea, ammonium nitrate, or UAN (urea ammonium nitrate), which are widely used in fertilizers.
This conversion process is energy-intensive and heavily reliant on natural gas, which serves as both a feedstock and an energy source. As a result, the most efficient nitrogen production facilities are located near cheap and abundant sources of natural gas. The United States, with one of the largest supplies of natural gas in the world, is a significant player in this industry.
Despite producing nearly 30 million tons of nitrogen fertilizer annually, the U.S. still imports large quantities to meet domestic agricultural demand. This is because nitrogen fertilizers—including anhydrous ammonia, urea, UAN, and ammonium nitrates—are actively traded on global markets. Countries like Russia and China currently outproduce the United States in nitrogen fertilizer output, contributing to a highly competitive and geopolitically influenced global market.
The global nature of this supply chain makes it particularly sensitive to disruptions—whether due to conflict, trade restrictions, natural disasters, or shifts in energy prices. Understanding how nitrogen flows from production facilities to farms around the world helps us better appreciate the interconnectedness of modern agriculture and global economics.
Global Disruptions Impacting Supply Chains
Russia-Ukraine War
- Russia is one of the world’s top nitrogen fertilizer exporters.
- Sanctions and shipping disruptions have constrained global supplies.
- Increased prices due to uncertainty and tighter supply.
- Europe faced energy shortages as natural gas prices spiked, affecting fertilizer production capacity.
China’s Export Restrictions
- China is another major nitrogen producer and exporter, especially of urea.
- In recent years, China imposed export restrictions to protect domestic agriculture amid rising global prices.
- These policies tightened global supplies and drove prices higher—especially impacting countries in Asia and Africa that rely on Chinese exports.
COVID-19 Aftermath
- Initial lockdowns disrupted factory production and port operations.
- Labor shortages and container backlogs delayed deliveries.
- Shift in energy demand altered natural gas prices, impacting fertilizer production costs.
Strategic Implications for U.S. Agriculture
- Supply Risk: Dependence on imports makes U.S. agriculture vulnerable to geopolitical shocks.
- Price Volatility: Farmers are highly exposed to swings in global fertilizer markets.
- Domestic Production Push: There’s growing interest in boosting U.S.-based nitrogen production and infrastructure to reduce reliance on volatile foreign supply.