It was getting late the other evening when I got the report: “we’re almost out of baby formula!” I dashed to the local supermarket to resupply...only to be greeted by nearly empty shelves in the baby food section.

It’s been an all too common problem lately, as infant formula shortages have swept the country after a major plant was closed by the FDA due to bacterial infection.

It seems like we’re out of everything these days, and not just baby formula. Pain at the gas pump means our daily commutes are twice as expensive as they were a year ago. Of course, you can cut back on gasoline use by nixing things like road trips, consolidating your errands into one more efficient route, and just driving a bit slower to maximize fuel economy.

And shortages don’t just include the products themselves, but the extensive inputs to produce and transport them too. 

Most people don’t think too hard about what it takes for a loaf of bread to end up on their grocery store shelf. It takes people cooperating all over the world in a long, almost miraculous chain of relationships.

Those supply chains include oil and gas, needed to both grow and ship agricultural products. Natural gas isn’t just a source of energy; it is the feedstock for producing nitrogen-based fertilizers needed to maximize crop yields. 

The same feedstock is at the base of production for insecticides and herbicides. More generally, oil and gas, already at historically high prices, have driven up the prices of these basic agricultural inputs, as well as the prices of the fuels needed to work the land and transport its produce.

But we all have to eat! Sharply rising food prices indicate falling supplies, and not just for foods themselves. 

The things we need to grow food like fertilizers have skyrocketed in price, add to that the ongoing fertilizer crunch and the secondary effects of the war in Ukraine (Russia and Ukraine are the sources for major grain and fertilizer exports), and we’ve got a serious problem on our hands!

It’s also a great time to be in the fertilizer business as demand meets reduced supply. There are three major fertilizer inputs needed for modern agriculture: nitrogen, potassium, and phosphate.

In the US, Florida is the premiere phosphate producer. Geologically, it wasn’t all that long ago that the entire state was underwater and massive deposits formed there. Today, those deposits are mined, making Florida by far the largest producer in the United States.

Demand for phosphate is set to remain strong through next year, and companies that can supply the ingredients for fertilizer are likely to enjoy a productive and profitable 2022.

To a bright future,

Ray Blanco
Chief Technology Expert, Technology Profits Daily
AskRay@StPaulResearch.com