Your food will be expensive for a while
The food sector uses around 30% of total global primary energy consumption. Energy consumption is typically disaggregated into direct or indirect energy. Direct energy is used at the operational level primarily on farms and processing plants, for example for irrigation, land preparation and harvesting.
Fertilizer accounts for 44% of food commodity cost, far exceeding the importance of direct energy, making it essential for understanding food markets.
big government subsidy checks for people to seat at home for the past 18 months. They were happy but the bills always come due.
The higher costs of energy and fertilizers percolates to the checkout counter.
The food sector uses around 30 percent of total global primary energy consumption. Energy consumption is typically disaggregated into direct or indirect energy. Direct energy is used at the operational level primarily on farms and processing plants, for example for irrigation, land preparation and harvesting.
Fertilizer accounts for 44% of food commodity cost, far exceeding the importance of direct energy, making it essential for understanding food markets.
Abstract
Since the 2008 Food Crisis, the link between agriculture and energy has become contentious. Agriculture consumes energy both directly, through oil products, and indirectly, through fertilizer.
Since fertilizer cost depends on natural gas prices, we exploit variations in the oil/gas spread to estimate the causal cost contribution of fertilizer to agricultural commodity prices
. Fertilizer accounts for 44% of food commodity cost, far exceeding the importance of direct energy, making it essential for understanding food markets. Shocks to fertilizer markets may thus have a far wider economic and social impact than so far acknowledged.
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