Nutrient Management

A set of practices and technology for the more efficient use and application of synthetic nitrogen fertilizer as well as substitutes including biological fertilizer and environmentally friendly fertilizers (EFFs).

Why This Solution Matters

The creation of synthetic nitrogen fertilizers at the start of the 20th century was a turning point in history, enabling intensification of agriculture and fueling a population boom due to increased food availability. However, contemporary challenges associated with excessive nitrogen and phosphorus inputs necessitate a critical reevaluation of their role in agricultural systems, since industry and agriculture release more fertilizers into the environment than it can absorb while still maintaining a stable balance.

The excessive use and inappropriate application methods of synthetic nitrogen fertilizers in fields for food, animal feed and energy crops lead to the annual waste of approximately 75 million tonnes, as of 2021. This waste ultimately runs off into rivers, lakes, and natural environments. The resulting “excess nitrogen” releases significant amounts of Nitrous Oxide (N2O) - a greenhouse gas 300 times more potent than CO2 per ton. It also leads to severe pollution due to fertilizer leaching from agricultural soils into water bodies. This process causes eutrophication and the release of methane, another potent GHG.

In a seminal study released in 2009, scientists estimated nine “planetary boundaries” that define a safe operating space for humans. At that point, they found that three boundaries had been breached. This framework has undergone several updates since its inception. In the latest 2023 update, all boundaries were quantified, leading to the conclusion that six out of nine had been breached. Notably, the boundary related to nitrogen and phosphorus has been significantly exceeded, posing a threat to Earth's operating system (Fig. 1).

Figure 1: The 2023 update to the Planetary boundaries. Licensed under CC BY-NC-ND 3.0. Source: Stockholm Resilience Centre (2023)

The total agricultural use of inorganic fertilizers, expressed as the sum of the three nutrients nitrogen, phosphorus and potassium, was 201 million tonnes in 2020, of which 56% was nitrogen. The overall fertilizer use in 2020 was 66 million tonnes, or 49%, higher than in 2000. Asia represented 55% of world total agricultural use of inorganic fertilizers in 2020 (Fig. 2), followed by the Americas (27%), Europe (12%), Africa (4%), and Oceania (2%). The main users of inorganic fertilizers are China, India, Brazil and the United States of America.

According to a study released in 2022, synthetic N fertilizer supply chain was responsible for estimated emissions of 1.13 GtCO2e in 2018, representing 10.6% of agricultural emissions and 2.1% of global GHG emissions.

Figure 2: Inorganic Fertilizer Use By Nutrient and Region. Source: FAO (2022)

Synthetic nitrogen fertilizer is critical for global food security, enabling the intensification of food production which has a land-sparing effect. But it must be used judiciously. Reducing wastage and/or replacing synthetic nitrogen fertilizer with bio-fertilizers can curb nitrous oxide emissions, reduce environmental pollution and associated biodiversity loss while maintaining soil health, productivity and ensuring global food security. In a decade-long trial in China, scientists found that better management practices boosted crop productivity by 11% despite an average 16% reduction in nitrogen application. This provided farmers with an economic return of USD 12.2 billion.

Investment State of Play

With the recognition of the environmental issues related to nitrogen fertilizer, there has been a rise in exploring more sustainable applications that still ensure sufficient crop productivity to support the ongoing global population growth. As a result, the last decade has seen a significant increase in venture investment in agricultural technology (AgTech) as the sustainability and productivity challenges of agriculture and food have attracted investment talent and entrepreneurship (Fig 3).

Nutrient management has emerged as a crucial area of opportunity in recent years, coinciding with record profits for the fertilizer industry. Major players like Nutrien Ltd., the world's leading potash producer based in Canada, saw a 1575% increase in profits between 2020 and 2022, reaching USD 7.7 billion. Similarly, The Mosaic Co., a Tampa-based leader in potash and phosphate fertilizers, reported a 438% increase in net earnings to USD 3.6 billion for 2022 compared to 2020. CF Industries, an Illinois-based fertilizer company, had a 265% increase in its 2022 profits, reaching USD 3.35 billion.

The search for sustainable fertilizer solutions has sparked investor interest, leading to a significant influx of funds and venture firms looking to secure favorable positions. On-farm technology alone attracted USD 10.2 billion in investments in 2022. Much of this investment activity was driven by two sectors - Ag Biotechnology (USD 2.4 billion) and Novel Farming Systems (USD 2.8 billion). Ag Biotechnology helps to diversify crop input technology away from environmentally-harmful synthetic chemicals and includes biofertilizers, soil health systems, precision agriculture technologies and coatings that inhibit nitrous oxide formation. Novel Farming Systems involve innovative, tech-driven strategies for sustainable food production that challenge traditional methods. These often operate in controlled environments, striving for increased yields, resilience, and a reduced environmental impact.

As of 2023, there are five categories of interventions poised to shape the market:

Precision application technology such as nutrient sensors, drip application through irrigation systems, “fertigation”. Companies include CropX, Arable, Teralytic;
Low-carbon fertilizers utilizing renewable energy for synthetic nitrogen fertilizer production. Companies include Nitricity, Atmonia;
Controlled release fertilizers that inhibit nitrification. Companies: Yara, Nutrien, Haifa;
Biofertilizers which use microbes to fix nitrogen naturally into a form that the plant can absorb. Companies include Pivot Bio, Kula Bio, Joyn Bio;
Sustainable fertilizers which utilize organic waste (food, wastewater, animal manure) as input to create fertilizer. Companies include WISErg, Anuvia, Ostara, N2 Applied.

Private equity is beginning to flow to several of these startups. Pivot Bio, one of the pioneering biofertilizer startups, has raised more than USD 600 million in funding for its proprietary crop microbiome, closing a USD 430 million Series D round in July 2021, after seeing its revenues increase threefold since the beginning of 2021. Lead investors included Temasek, DCVC, Rockefeller Capital Management and Breakthrough Energy Ventures. Pivot Bio was initially supported by early grants from the Gates Foundation in 2011. Other startups trying to take advantage of nitrogen-fixing microbes to address the negative impacts of synthetic fertilizers include Kula Bio, which in May 2021 secured USD 10 million in seed funding from Collaborative Fund, with participation from The Nature Conservancy, Lowercarbon Capital, iSelect Fund and the Grantham Foundation’s Neglected Climate Opportunities Fund, among others. In January 2022, Kula Bio raised an additional USD 50 million in its Series A round with investors, including Ying Fund, Pillar VC, HT Capital, Embark Ventures, and BOPU.

Sustainable fertilizer company, Anuvia, which manufactures nitrogen fertilizer from waste sources raised USD 103 million Series C funding co-led by TPG ART and Aliment Capital in February 2021. Additionally, in April 2022, Anuvia secured USD 65.6 million in a Series D round. Anuvia’s fertilizer, SymTRX, is already available commercially in the US and usage is expected to grow to 20 million acres by 2025. Chinese precision agriculture platform Kebai also secured USD 6 million from Creadev, the investment firm of the Muillez family, owners of Auchan and Decathlon. Nitricity, a fertilizer company producing synthetic nitrogen fertilizer using renewable energy closed a USD 5 million Series Seed round led by Energy Impact Partners in August 2021. Later, in October 2022, the company raised USD 20.9 million in a Series A funding round. In addition, Nitricity is collaborating with the Center for Irrigation Technology to pilot a fertilizer-in-irrigation system for growing tomatoes. In March 2023, Yara and Enbridge announced plans to invest up to USD 2.9 billion to construct a low-carbon blue ammonia production facility in Texas. This facility will produce blue ammonia from natural gas, capturing and storing the carbon dioxide (CO2) byproduct. The proposed plant, set to be Yara's largest, will be located at an Enbridge oil storage, and is expected to start production around 2027-28.

Driven by a recognition of a growing strategic market opportunity, as well as pressure from government regulators and advocacy groups, an increasing number of fertilizer companies are beginning to invest in innovative startups. In one of the buy side deals of 2020, ICL, the USD 5 billion Israeli fertilizer company, acquired Growers Holdings, a US precision agriculture company in a USD 60 million buyout. In 2017, Yara International acquired Adapt-N, a precision nitrogen management solution that was developed at Cornell University. And in 2019, the company launched Yaralrix, a precision farming tool that allows farmers to measure crop nitrogen requirements using their smartphones. In 2021, Yara entered into a partnership with Statkraft and Aker Clean Hydrogen to launch HEGRA focused on the production of “green” ammonia that would then be used to produce carbon-free fertilizers.

Another industry giant - Bayer AG, has taken action in three areas. In 2018, it entered into a USD 100M joint venture with biotech leader Ginkgo Bioworks to launch biofertilizer company Joyn Bio. It raised a Series A USD 15 million round in September 2021 in Andes, a startup that treats seeds so the plant can better fix its own nitrogen supply from the air. In August 2021, the company led a USD 45 million round in Sound Agriculture, a “bio-inspired” inputs company which produces a soil treatment to reactivate plant nutrient cycling which Bayer says could reduce nitrogen fertilizer demand by 30%. Other notable investors in Sound Agriculture include Northpond Ventures, Cavallo Ventures, Fall Line Capital, S2G Ventures, and Syngenta Group Ventures.

This is a dynamic field and investment is expected to grow as sustainable agriculture practices become mainstream. Estimates of the investment required to convert conventional agriculture to regenerative and low carbon practices vary from USD 315 - 420 billion per year until 2030, nearly the amount invested in renewable energy infrastructure each year. The business case for farms and farmland investors is built around reduced input costs in the medium term. Project Drawdown estimates nutrient management could save farmers USD 23 - 70.8 billion in reduced fertilizer costs between 2030 to 2050. Lowering agrochemical inputs from more precise application can significantly improve farm operating margins and the potential savings of USD 200 billion of wasted reactive nitrogen every year. Investing to improve nutrient management on-farms is a high-impact solution.

Biodiversity & Conservation Impact

Although global agricultural productivity is heavily dependent on the use of fertilizers, many studies demonstrate that the long-term addition of them can also negatively affect ecosystem carbon and biodiversity. Globally, an estimated 115 million tonnes of nitrogen fertilizer is applied to agricultural land every year, as of 2021. However, only about 46% is actually utilized by crops. The excess nitrogen drains into water bodies, causing widespread aquatic pollution and eutrophication, triggering a rapid growth of plant life and death of animal life from lack of oxygen. The excess nutrients in waterways often leads to harmful algae blooms which threaten aquatic biodiversity, human health and economic livelihoods and food security. Nitrogen and phosphorus cause 78% of the global marine and freshwater eutrophication. In the US alone, freshwater algae blooms create economic losses of more than USD 4 billion annually, as of 2019, from harm to aquatic food production, recreation, tourism, and drinking-water supplies.

Eutrophication can deplete oxygen in the water resulting in oxygen-free “dead zones” and mass die-offs of aquatic biodiversity with knock-on effects on the long-term trophic structure of a habitat. Dead zones in the world’s oceans have increased from less than five around the 1940s to roughly 700 documented cases, as of 2020. With the increasing prevalence of dead zones globally, the threat to industries that depend on biodiversity grows. A report by the Union of Concerned Scientists released in 2020 estimated that the Gulf of Mexico Dead Zone has caused up to USD 2.4 billion dollars in damages every year since 1980, threatening the Gulf’s commercial and recreational fishing industries that generated USD 57 billion in revenue and 200,000 jobs in 2016.

Although often thought to be an “insurance policy” against yield-limiting nutrient losses, excessive application of synthetic nitrogen fertilizer has been shown to also degrade soil health by altering organic matter content, microbial diversity, and the level of acidity in the soil. A study found that under optimal rates of fertilization, soil organic carbon storage was maximized. This effect decreased with increasing application rates of fertilizer. Another study demonstrated that after forty years of nitrogen fertilizer application, the ability for soil to sequester carbon has all but vanished. Since the 1970s, the effectiveness of fertilizer nitrogen has decreased by 66%.

Leaching of nitrogen fertilizer deteriorates groundwater quality. Nitrate toxicity has been reported in a number of studies showing the health hazards in infants and linked to an increased risk of cancer.

While the environmental footprint of current fertilizer practices poses profound challenges to biodiversity, there are emerging solutions. Precision agriculture, optimizing nutrient delivery through data-driven insights, and bio-fertilizers, harnessing nature's microbial allies, offer pathways to a sustainable future where food production and environmental well-being co-exist.

Social Justice

Despite exceeding the planetary boundaries for nitrogen and phosphorus, a significant portion of the global population still suffers from undernutrition and food insecurity. This paradox exposes the limitations of the green revolution. While it significantly increased production, it also triggered a cascade of social and environmental issues: water pollution, soil degradation, and health risks for farmers and nearby communities. These consequences disproportionately impact small-scale farmers, perpetuating poverty and hindering equitable access to nutritious food.

In developing nations, small-scale farmers often struggle to access the resources designed to increase yields due to financial and logistical challenges. This difficulty in achieving optimal application results in a cycle of low productivity, contributing to ongoing food insecurity and poverty. Conversely, industrial farms frequently use excessive amounts of fertilizer, leading to environmental issues such as water contamination, soil degradation, and health risks for nearby communities. These negative impacts disproportionately affect vulnerable populations.

Nature-based solutions offer a promising approach to these challenges. By restoring ecosystems and integrating ecological principles into agriculture, NbS can improve soil health and fertility, leading to higher yields and incomes for small-scale farmers. However, to unlock the full potential of NbS, equitable access and community empowerment are crucial. This requires targeted investments in knowledge sharing, capacity building, and infrastructure development for small-scale farmers.

Climate Impact

The use of fertilizers contributes to climate change in various ways. The energy-intensive processes of extracting and manufacturing fertilizers require significant quantities of fossil fuels to be burned in order to convert raw materials into usable products. The storage, transportation, and application of these fertilizers also result in substantial greenhouse gas emissions (Fig. 4). Consequently, the production of synthetic nitrogen fertilizer is responsible for 2.1% of global GHG emissions, as of 2022, and consumes approximately 1% of the world’s energy. GHG emissions range from 2 - 6 kg CO2e per kg of nitrogen fertilizer produced depending on the region, and energy source (e.g. coal vs gas). Application of fertilizer and the interaction with soil can release an additional 9.4 kg CO2e per kg of nitrogen fertilizer.

Figure 4: Fertilizer sector emissions

Source: Systemiq & International Fertilizer Association (2022)

Beyond production, the application of fertilizer also contributes to climate change in another significant way. Through a process called nitrification, soil bacteria convert nitrate fertilizers into nitrous oxide (N2O), a long-lived greenhouse gas with a heating effect 300 times that of CO2 and is also a key factor in ozone layer depletion. N2O is the third largest source of global warming emissions after CO2 and methane. Atmospheric N2O concentrations have increased by 30% over the past four decades, with the majority of emissions caused by the addition of nitrogen fertilizer to croplands (Fig 5).

Figure 5: A graphic summary of the world’s global nitrous oxide budget from 2007 - 2016

Source: Carbon Brief (2020)

It is expected that nitrogen fertilizers will play a critical role in the coming decades with a growing population and increased food demand. If nitrous oxide emissions are not curbed, it could contribute to exceeding the critical 3°C global warming limit .

Reducing wastage of synthetic nitrogen fertilizer through efficient and precise application and/or the substitution with bio-fertilizer can mitigate the release of nitrous oxide.

Improved crop nutrient management can reduce N2O emissions from cropland soils. Practices include optimizing fertilizer application delivery, rates and timing, utilizing different fertilizer types (i.e., organic manures, composts and synthetic forms), and using slow or controlled-release fertilizers or nitrification inhibitors. In addition to individual practices, integrated nutrient management that combines crop rotations including intercropping, nitrogen biological fixation, reduced tillage, use of cover crops, manure and biofertilizer application, soil testing and comprehensive nitrogen management plans, is suggested as central for optimizing fertilizer use, enhancing nutrient uptake and potentially reducing N2O emissions.