Fertiliser: a shared (and growing) problem

Russia's invasion of Ukraine in February 22 resulted in a genuine earthquake in the world food system. Grain shipments dominate the media headlines, but this is not the only disruption. Fertiliser costs have increased as a result of this invasion, not just in Europe, but globally. Impacting both food production costs and future crop yields.

According to data provided by the World Bank, prices for two important fertilisers substantially increased between April 2021 and April 2022: diammonium phosphate costs increased by 75%, while potash prices increased by an astounding 178%. The price of urea also increased by almost 18% over the last peak that was noted in 2008.

Since 2021, the price of gas, a raw resource used to make urea, has gone up internationally. The Food and Agriculture Organization (FAO) of the United Nations claims that the high costs of international sea transport freight and the following escalation of tensions between Russia and Ukraine had an influence on imports. Additionally, the rise in the price of coal in China resulted in a decrease in fertiliser output and the ensuing limitations on exports, which were put in place to ensure the supply of the Asian nation.

In Peru the cost of fertiliser has increased almost 150%, increasing food production costs and placing it out of reach for some farmers. National Agricultural Survey states that there are 2,244,000 small and medium-sized farmers in Peru that have been impacted by the global fertiliser crisis. Nearly half (46.7%) of them use chemical fertilisers.

Several staple foods such as rice, corn and potatoes have seen increases in wholesale costs of more than 200%. There are further expectations that prices will rise by 30% in 2023. This is expected to aggravate the financial circumstances of Peru's poorest citizens and raise the number of those who face severe food insecurity.

Peru is not unique in this regard. A large number of other nations—including those in Europe, Africa, and the United States—are similarly impacted by the fertiliser problem.

United Nations backing is anticipated since they have reiterated it. However, it is anticipated that the high fertiliser prices would persist in 2023.

This example illustrates the inter-connectedness of global markets and how actions in Ukraine are felt on the other side of the world. It further illustrates the exposure of developing countries least able to absorb higher costs, compounded by the potential for lower future crop yields.

Stephanie Hawkins