Don Kolla, a farmer and investor in Genesis Fertilizer, at his home near Cudworth, Sask., April 17. The war in the Middle East has pushed up fertilizer costs, adding pressure on farmers like him.Liam Richards/The Globe and Mail
Don Kolla is sick of paying too much for fertilizer.
Which is why the Saskatchewan farmer invested $70,000 in a regional plant that would produce urea – the most widely used fertilizer in the world.
The plant would give control back to Western Canadian farmers such as himself, he believed.
Western Canada claims some of the largest and cheapest natural gas reserves worldwide, and natural gas availability is crucial when it comes to most production of nitrogenous fertilizers. It typically accounts for 70 per cent of variable production costs.
But despite having ample access to these reserves, Canada doesn’t make enough urea to meet domestic demand.
This leaves the nation’s farmers prey to a global market that has fallen into chaos numerous times in the past six years, the latest being the war in the Middle East, which took 43 per cent of urea trade out of the equation, hiking prices by 50 per cent in five weeks. Even if the Strait of Hormuz opens and remains open, destruction to infrastructure and supply chain delays mean a return to prewar prices won’t happen for years.
“It’s ridiculous,” Mr. Kolla said. “Urea fertilizer is made of natural gas and water. We have an abundant supply of natural gas in Western Canada, and we also have a good supply of water. There’s no justification for the price.”
The urea plant in Belle Plaine, Sask. would have pumped out 2,500 tonnes of urea a day with carbon capture technology to reduce emissions (nitrogen production is a substantial emitter of greenhouse gases). It would be situated close to a railway, a natural gas plant and lots of water, and it was forecast to cost between $2-billion and $3-billion.
Opinion: How Canada can protect its food system in an increasingly uncertain world
Mr. Kolla would pay market rate for his annual urea needs, and he would get his money back when the company that owned the plant – Genesis Fertilizers LP – started to turn a profit. It meant farmers would benefit from the difference between production costs (low in Canada) and the global market rate.
It would have been one of the first large-scale nitrogen fertilizer plants built in Western Canada in decades.
And it got off to a good start. As of early 2025, plans for the Genesis Fertilizers plant were moving ahead swiftly. The project had advanced through site acquisition, permitting, environmental assessments and front-end engineering work, financed by approximately $50-million in farmer investment.
But the plant has not become a reality. A series of events wetted farmer appetite: U.S. tariffs, inflation, a trade war with China over canola and a legal battle between the two brothers behind this project.
Genesis Fertilizers must now secure a strategic investor, said former interim chief executive Derek Penner.
But investors from Asia to Europe told him the same thing: not without a support signal from the government. And as much as Mr. Penner has tried, he can’t get the plant considered for Ottawa’s major projects list. Not without backing from the federal government.
This lack of interest from governments doesn’t come as a surprise to people who watch the global fertilizer market closely. When it comes to this sector, Canada is behind the curve.
The series of geopolitical crises over the past five years have shaken the notion that a nation can depend on the global fertilizer trade to secure agricultural production. Other nations in possession of the critical resources required to make their own fertilizer have done so, seeing the industry as core to sovereign food supply.
In comparison, Canadian fertilizer strategy is fragmented and stuck in the past – betting on other countries to safeguard its food supply, said Asim Biswas, a professor of soil and precision agriculture at the University of Guelph.
“Without food, you cannot a single day pass,” he said. “This is such a resource that will never have less demand. It will continue to grow. And if we can invest, we can build something that is an economic driver.”
The first step in urea production is the Haber-Bosch process. Developed in 1905, it was a century-defining breakthrough. Finally, nitrogen could be fixed from the air and – when combined with hydrogen from natural gas – turned into something that could be used by plants: ammonia.
Ammonia-based fertilizers are used for about half of the world’s food production.
Canada produces enough ammonia for export and is a material supplier to markets around the globe, said Al Mussel, researcher and founder of Agri-Food Economic Systems.
But ammonia is not easy to handle. Without further treatment, it is a caustic, hydrophilic gas that is quick to attach to moisture in the eyes, mouth, throat and lungs. It burns the skin and can cause blindness.
When this ammonia is combined with carbon dioxide in conditions of high pressure and temperature, and then concentrated and solidified, it becomes a much more manageable substance: urea.
Urea typically comes in the form of a white odourless pellet. It can be stored for months on end, a critical feature given prices these days, Mr. Kolla said.
Urea is the most widely used fertilizer globally. There are more than 400 producers worldwide with a total capacity of 240 million tonnes.
In 2025, Canada ran a trade deficit in urea of 650 million kilograms, a number that has almost doubled over the past five years. Eastern Canada is especially exposed, importing 284,000 tonnes of the nutrient nitrogen in 2022, according to a paper written by Mr. Mussel at the time.
Importing urea is costly, Mr. Penner said. Canadian farmers typically pay a price set at the port in New Orleans, La., and then pay for the transportation north.
Importing urea also leaves farmers vulnerable to what has become a volatile global market.
Fertilizer is not typically stockpiled, as oil is, said Joshua Mayfield, fertilizer analyst for Hallgarten and Co. The markets operate on a just-in-time supply chain model. And that supply chain model has been undermined by global crises three times in the past five years.
In 2021, in the midst of a global pandemic, Beijing curtailed exports of critical fertilizers until after the country’s planting season ended. These export limits stand today, despite the war in the Middle East substantially driving up the cost of fertilizers.
In 2022, when Russia invaded Ukraine, rail and seaway closings disrupted the movement of fertilizers from one of the other largest producers worldwide. Western countries – including Canada – responded to Russia’s invasion with sanctions on its fertilizer and natural gas exports. European producers cut off from natural gas shuttered their plants.
And then in February, the outbreak of the war in the Middle East blockaded shipments of fertilizer through the narrow Strait of Hormuz – a channel responsible for 43 per cent of seaborne urea exports. Countries in the region, including Iran, Saudi Arabia and Qatar, are responsible for 35 per cent of globally traded urea. Numerous urea plants have shuttered.
Countries outside the Middle East also depend on the region’s natural gas for their own urea production. India’s urea output has fallen to 800,000 tonnes a month from 2.6 million. Nitrogen plants in Europe, Pakistan and Bangladesh also depend on natural gas from the Middle East and have either closed down or slowed production.
Even if the Strait of Hormuz should remain open, urea prices for North American farmers will be around 35 per cent above precrisis levels, according to a report from North Dakota State University. Infrastructure critical to urea production has been damaged and fixing it will take time. Prices will remain 13 per cent above precrisis levels into spring 2028.
“We’ve hit a brand-new floor price in Western Canada,” Mr. Penner said. “We’re never going to see these cheap fertilizer prices that we saw again.”
Other countries besides Canada – especially those with access to the critical materials required to produce fertilizer – have rolled out national strategies to buffer their food production from events like this.
India is aggressively pursuing more self-reliance in fertilizers. To reduce reliance on trade and minimize its approximately US$20-billion fertilizer subsidy, Delhi began building its national fertilizer production over a decade ago, especially for urea. The nation is now the largest producer of nano urea, a novel product that promises to radically enhance nutrient uptake and cut down on nitrogen production pollution. India is signing trade deals with key emerging agricultural economies, and Indian firms are piloting nano-fertilizer projects in Kenya, Nigeria and Ghana.
Mexico’s largest state-owned company, petroleum giant Pemex, is branching into nitrogen production. Morocco’s OCP Group is launching a strategy to supply Africa with phosphate. And Nigeria’s Aliko Dangote – the continent’s wealthiest man – pouring US$40-billion into an energy and fertilizer strategy that plans to quadruple urea fertilizer output. Mr. Dangote will use Nigeria’s ample natural gas reserves to accomplish this goal.
“Nigeria clearly sees an opportunity in what’s going on with Russia and China,“ Mr. Mayfield said. ”They think that they’re going to capture a lot of that market share."
U.S. President Donald Trump has also zeroed in on fertilizer markets. In a bid to placate farm states, in the spring of last year, the U.S. Department of Justice launched an antitrust investigation into fertilizer majors, including Saskatchewan’s Nutrien Ltd.
Mr. Mayfield doubts the investigation will lead to solutions, and he suspects it is likely to quell investment.
But at least the United States is talking about fertilizer, Prof. Biswas said.
Canada’s fertilizer policy is “fragmented” at best, he said.
Nitrogen sits in the intersection of energy, agriculture and industry, he said. The country also has the natural resources and expertise in gas technology. It also has a carbon policy and hydrogen strategy. But it has failed to connect the parts.
Prof. Biwas wants to see Ottawa roll out a policy that includes targeted incentives that will offer a clear road map for growth. This includes safeguards and incentives to make sure future nitrogen production is cleaner.
Strategies for incentivizing clean fertilizer production were laid out in a 2023 report from Fertilizer Canada. Commercially available but capital-intensive technologies include carbon capture and hydrogen production through electrolysis.
Canada does not have a choice but to come up with some kind of fertilizer strategy, Prof. Biswas said. Not only does Canada have the key strategic resources to be a major player, but national food sovereignty depends on it.
“We should think about nitrogen as strategic infrastructure,” he said. “It should be treated the same way as we treat energy security or food security, because to get to food security, we need that fertilizer.”