A $200 Billion Market Opportunity to Address Trillions in Environmental and Health Damages
This article is part of our series addressing the environmental impact and opportunities for innovation with fertilizer. Part one addressed the impacts of fertilizer on water quality and human health.
Imagine if a product your business relied on was fifty percent effective at best. The product uses century-old technology with minimal innovation. The product comprises one-third of your expenses due to dramatic price increases. Not only is the product inefficient to use, but it is also energy-intensive to produce, consuming four percent of the world’s natural gas. Every time you use the product, you cause environmental harm, including water and air pollution. In total, the production and use of the product contribute five percent of global greenhouse gas emissions.
That product is synthetic nitrogen fertilizer, an input linked to trillions of dollars in global environmental and human health harms (Sobota et al., 2015; Walling & Vaneeckhaute, 2020). While few other products with this track record would persist in a competitive market, about half of global crops rely on nitrogen fertilizer inputs. Despite many negatives, global nitrogen fertilizer use has increased by 650 percent over the past six decades, with only a slight decline in 2021 (Richie & Roser, 2024).
$200 Billion Market Potential
The value of the global fertilizer market is $200 billion, and it is projected to grow to $257 billion by 2032 (Pulidindi & Prakash, 2024). The opportunity for innovation and disruption is so significant and critical that the USDA invested $500 million in efforts to promote innovative and sustainable U.S. fertilizer production and increase the adoption of precision agriculture and other techniques to improve fertilizer use efficiency (USDA, 2022). In addition, the European Commission released a communication on ensuring the availability and affordability of fertilizers and improving nutrient management (Garske et al., 2024).
The 4Rs of Improving Nitrogen Use Efficiency
Reducing synthetic nitrogen fertilizer use requires improving the efficiency of this input. This goal can be achieved through management practice changes, technology, or a combination of strategies. Best practices for fertilizer management are often framed under the“4R” framework:
· Right source, matching the product type to the crop type, soil condition, plant needs, environmental conditions, and climate.
· Right rate, determining the correct amount of nitrogen for yield potential, without over-use, given plant and soil needs, climate conditions, and economic constraints.
· Right place, delivery of plant accessible nutrients while minimizing potential for nutrient loss to the environment.
· Right time, applying nutrients based on plant needs and soil conditions, how long the soil will retain nutrients, and the right climate conditions to avoid nutrient loss.
The 4Rs Can be Effective if Barriers are Addressed
Meta-analysis of crop and management data shows that 4R practices reduce nitrate pollution by one-third or more while increasing profitability and, in some cases, yield for farmers (Gu et al., 2023). However, farmers may not implement these practices for reasons including fear of a loss of yield, lack of technical support, complexity and added labor, use of an application rate recommendation from a fertilizer dealer, or policies such as crop insurance that require fertilization rates (Upadhaya, 2023; Osmondet al., 2014).
Fortunately, the mix of practices, and evolving tools and technologies offer solutions to farmers’ challenges, and a means to reduce environmental impacts from synthetic fertilizers.
Solutions Both Old and New
The most straightforward path to addressing fertilizer overuse is reducing the need for inputs by building healthier soils. Practices that build soil health and diversify the source of fertility include implementing more complex crop rotations, including nitrogen-fixing crops, green manure intercropping, and cover crops where appropriate. Diverse crop rotations reduce the need for fertilizer inputs, improve soil health and yield over the long term, and reduce the risk of crop loss during drought by up to 90 percent (Wagner et al., 2021). Integrating managed grazing can help rebuild carbon stocks in the soil.
No-tillage practices increase soil organic matter and soil health in the long term, which can reduce the need for nitrogen fertilizer. However, no-till farming may require the use of “right place” practices, banding or injection of fertilizer to avoid increased leaching of nitrates (Daryanto et al., 2017).
Novel approaches to crop fertilization include precision agriculture, nitrate and urease inhibitors, and biofertilizers and inoculants. These technologies offer pathways to improve nitrogen use efficiency, identify the right rate and timing of fertilizer application, reduce the need for added nitrogen, and increase the adoption and effectiveness of 4R practices. The innovations also offer a path to profit from solving the nitrogen problem, given the $200 billion fertilizer market. Our next and final article in this series will look at these innovations, how they support the 4Rs, and their role in addressing the issues with nitrogen fertilizers.
References
Daryanto, S., Wang, L., & Jacinthe, P.(2017). Impacts of no-tillage management on nitrate loss from corn, soybean and wheat cultivation: A meta-analysis. Scientific Reports, 7(1). https://doi.org/10.1038/s41598-017-12383-7
Garske, B., Heyl, K., & Ekardt, F.(2024). The EU Communication on ensuring availability and affordability of fertilisers—a milestone for sustainable nutrient management or a missed opportunity? Environmental Sciences Europe, 36(1). https://doi.org/10.1186/s12302-024-00842-8
Gu B, Zhang X, Lam SK, Yu Y, van Grinsven HJM, Zhang S, Wang X, Bodirsky BL, Wang S, Duan J, Ren C, Bouwman L, de Vries W, Xu J, Sutton MA, Chen D. (2023). Cost-effective mitigation of nitrogen pollution from global croplands. Nature. 2023 Jan;613(7942):77-84. doi:10.1038/s41586-022-05481-8. Epub 2023 Jan 4. Erratum in: Nature. 2023Feb;614(7946):E19. doi: 10.1038/s41586-023-05708-2. PMID: 36600068; PMCID:PMC9842502.
Osmond, D. L., Hoag, D. L. K., Luloff, A.E., Meals, D. W., & Neas, K. (2014). Farmers’ Use of Nutrient Management: Lessons from Watershed Case Studies. Journal of Environmental Quality, 44(2),382–390. https://doi.org/10.2134/jeq2014.02.0091
Pulidindi, K., & Prakash, A. (2024).Fertilizer market - by form (Dry, liquid) by product (Organic, inorganic), by application (Agriculture, horticulture, gardening), forecast 2024 – 2032. In Global Market Insights Inc.https://www.gminsights.com/industry-analysis/fertilizer-market
Ritchie, H., & Roser, M. (2024,February 1). How many people does synthetic fertilizer feed? Our World in Data. https://ourworldindata.org/how-many-people-does-synthetic-fertilizer-feed
Sobota, D. J., Compton, J. E., McCrackin, M. L., & Singh, S. (2015). Cost of reactive nitrogen release from human activities to the environment in the United States. Environmental Research Letters, 10(2), 025006. https://doi.org/10.1088/1748-9326/10/2/025006
Walling, E., & Vaneeckhaute, C. (2020).Greenhouse gas emissions from inorganic and organic fertilizer production and use: A review of emission factors and their variability. Journal of Environmental Management,276, 111211. https://doi.org/10.1016/j.jenvman.2020.111211
USDA Foreign Agricultural Service. (2022,June 17). Global Fertilizer Challenge. https://fas.usda.gov/newsroom/global-fertilizer-challenge
USDA Foreign Agricultural Service. (2022,June 30). Impacts and repercussions of price increases on the global fertilizer market. https://fas.usda.gov/data/impacts-and-repercussions-price-increases-global-fertilizer-market
Upadhaya, S., Arbuckle, J., & Schulte, L. (2023). Individual- and county-level factors associated with farmers’ use of 4R Plus nutrient management practices. Journal of Soil and Water Conservation, 78(5),412–429. https://doi.org/10.2489/jswc.2023.00002
Wagner, Susan E., Jin, Virginia, and Schmer, Marty. (2021, November 16). More diverse crop rotations improve yield, yield stability and soil. Crop Watch. https://cropwatch.unl.edu/2021/more-diverse-crop-rotations-improve-yield-yield-stability-and-soil-health