the oil we eat!

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    Australian grain farmers are having their toughest year on record and the excuse given for this is poor commodity prices. Whilst this is a significant reason for the majority of grain farm budgets being in deficit for the coming grain crop, the other reason you won't hear about is the input cost flows from near record oil and gas prices. It takes the energy from roughly one litre of oil to manufacture one kilogram of nitrogen fertilizer. This industrial process known as the Haber process, requires high temperatures, high pressure and a catalyst to chemically bond hydrogen gas and nitrogen gas to form ammonia - the precursor to all nitrogen fertilisers.

    In effect the protein we all consumer on a daily basis mostly comes from oil/gas spigots around the world. So clearly the cost of food should track the cost of oil and gas. Well to date it has not and producers are absorbing these extra costs in a way that will potentially send many to the wall. If we were to have another rally in fossil fuel prices and soon, this process would simply be fast tracked. Not to forget that all pesticides are petroleum based plus the diesel required for mechanisation and transport to market.

    Agriculture is weathering the expensive energy storm far worse than the mining sector where record commodity prices are hiding the problem. SO the next time you go to the supermarket to do your shopping, enjoy the pleasure of having cheap food. Because significantly higher food prices are an energy crisis away.
 
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