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Sky-high fertilizer prices have farmers worldwide scaling back its use and reducing the amount of land they're planting, fallout from the Ukraine-Russia conflict that has some agricultural industry veterans warning of food shortages.
Western sanctions on Russia, a major exporter of potash, ammonia, urea and other soil nutrients, have disrupted shipments of those key inputs around the globe. Fertilizer is key to keeping corn, soy, rice and wheat yields high. Growers are scrambling to adjust.
The pivot can be seen in agricultural powerhouse Brazil, where some farmers are applying less fertilizer to their corn, and some federal legislators are pushing to open protected indigenous lands for the mining of potash. In Zimbabwe and Kenya, small farmers are reverting to using manure to nourish their crops. In Canada, one canola farmer has already stockpiled fertilizer for the 2023 season in anticipation of even higher prices ahead.
Farmers elsewhere are making similar moves. Reuters spoke with 34 people on six continents, including grain producers, agriculture analysts, traders and farm groups. All expressed concern about the cost and availability of fertilizer.
In the United States alone, fertilizer bills are expected to jump 12 per cent this year, after rising 17 per cent in 2021, according to American Farm Bureau Federation and US Department of Agriculture (USDA) data.
Some growers are contemplating switching to crops that require fewer nutrients. Others plan to cultivate less acreage. Others say they'll simply use less fertilizer, a strategy crop experts predict will hurt yields. Production is most at risk in developing nations, whose farmers have fewer financial resources to weather the storm, said Tony Will, chief executive of Illinois-based CF Industries Holdings, a leading producer of nitrogen fertilizer.
"My concern at the moment is actually one of a food crisis on a global basis," Will told Reuters.
On Saturday, Peru declared a state of emergency in its agriculture sector over fears of food insecurity.
The decree said the nation’s planted areas have fallen 0.2 per cent since August due to rising fertilizer prices, and that the volume of grain Peru imports for animal feed has likewise declined over cost concerns. The government is now drafting a plan to increase the country's food supply. DOUBLE WHAMMY Global fertilizer prices were already high prior to Russia's Feb. 24 invasion of its neighbor, as record natural gas and coal prices forced some fertilizer makers to cut output in that energy-hungry sector. Ukraine's cities have been besieged by missiles, tanks and troops in what Moscow has dubbed a "special operation” to demilitarize the country. Russia denies targeting civilians in the conflict.
Western nations responded with tough economic sanctions on Russia, while the United States and the European Union imposed new sanctions on Belarusian President Alexander Lukashenko, who has provided support for Russia's offensive.
Combined, Russia and Belarus accounted for more than 40 per cent of global exports of potash last year, one of three critical nutrients used to boost crop yields, Dutch lender Rabobank said this month. Additionally, Russia accounted for about 22 per cent of global exports of ammonia, 14 per cent of the world's urea exports and about 14 per cent of monoammonium phosphate (MAP) - all key kinds of fertilizers.
Sanctions have disrupted sales of fertilizer and crops from Russia. Many Western banks and traders are steering clear of Russian supplies for fear of running afoul of the rapidly changing rules, while shipping firms are avoiding the Black Sea region due to safety concerns.
It all amounts to a double whammy for the global food supply.
Russia and Ukraine are major grain producers. Together they account for about 30 per cent of global wheat exports and 20 per cent of corn exports. Grain shipments through the Black Sea have already been disrupted.
