Higher fertilizer prices are causing farmers around the world to reduce their use and reduce the amount of land they grow, resulting in Ukraine-Russia conflicts with veterans of the agricultural industry warning of food shortages.
Western sanctions in Russia, a major supplier of potash, ammonia, urea and other elements of the soil, have disrupted the export of those essential items worldwide. Fertilizer is the key to keeping the yields of maize, soybeans, rice and wheat high. Farmers are trying to fix it.
Pivot can be seen in a powerful agricultural environment in Brazil, where some farmers are applying less fertilizer to their industry, and some legislatures are trying to open up protected areas to dig potash. In Zimbabwe and Kenya, smallholder farmers are returning to using manure to feed their crops. In Canada, one canola farmer has already set up a 2023 season fertilizer in anticipation of very high prices to come.
Farmers elsewhere do the same. Reuters spoke with 34 people on six continents, including grain producers, agricultural analysts, traders and farm groups. They all expressed concern about the cost and availability of fertilizer.
In the United States alone, fertilizer bills are expected to drop by 12% this year, after a 17% increase in 2021, according to the American Farm Bureau Federation and US Department of Agriculture (USDA) data.
Some growers consider switching to plants that require fewer nutrients. Others plan to plant small acres. Some say they will use less fertilizer, which crop experts predict will damage the crop. Production is at high risk in developing countries, whose farmers have little money to deal with the storm, says Tony Will, chief executive officer of CF Industries Holdings in Illinois, a leading producer of nitrogen fertilizers.
“What worries me right now is one of the global food problems,” Will said.
On Saturday, Peru declared a state of emergency in its agricultural sector for fear of food shortages.
The ruling said the country’s plantations had dropped by 0.2% since August due to rising fertilizer prices, and that the value of grain exported to Peru for animal feed had declined due to cost. The government is now drafting a plan to increase the country’s food supply.
A double whammy
International fertilizer prices were already high before the Russian invasion in Feb. 24 to its neighbors, as the prices of natural electricity and coal force some fertilizer manufacturers to reduce their output in that energy-hungry sector. Ukrainian cities are besieged by arrows, tanks and troops in what Moscow calls a “special operation” to destroy the country. Russia refuses to recognize civilians in the conflict.
Western countries have responded to severe economic sanctions against Russia, and the United States and the European Union have imposed new sanctions on Belarus President Alexander Lukashenko, who has backed Russia.
Together, Russia and Belarus accounted for more than 40% of the world’s total potash exports last year, which is one of the three most important ingredients used to increase yields, Dutch lender Rabobank said this month. In addition, Russia accounted for about 22% of worldwide ammonia exports, 14% of urea exports and 14% of monoammonium phosphate (MAP) – all essential fertilizers.
Penalties have disrupted the sale of fertilizers and crops from Russia. Many Western banks and traders are reluctant to comply with Russian affairs for fear of violating ever-changing laws, while shipping companies avoid the Black Sea region due to security concerns.
It’s all about doubling the availability of food around the world.
Russia and Ukraine are major grain producers. Together they make up about 30 percent of the wheat exported and 20% of the exported corn. Shipping of grain to the Black Sea has already been disrupted. Stable imports from both countries have contributed to global food inflation. The World Bank said last week a number of developing countries were facing a shortage of wheat due to over-reliance on Ukrainian exports.
But the fertilizer problem is somehow more worrying because it could curb global food production that could help stagnate, says Maximo Torero, chief economist at the UN Food and Agriculture Organization.
“If we do not solve the fertilizer problem, and the fertilizer trade does not continue, we will have a big problem supply next year,” Torero said.
Brazil is in danger
Brazil, the world’s largest bean producer of beans, relies heavily on imported fertilizers such as potash, which made up 38% of the plant nutrients it used last year. Russia and Belarus were the source of a portion of those goods.
Prior to the Ukraine-Russia conflict, Brazilian farmers were already reducing maize production due to rising fertilizer prices. The planting of soybeans may also have an impact, as farmers grow much slower than in previous years, according to Agroconsult, a Brazilian agricultural company.
In the midwestern province of Mato Grosso, farmer Cayron Giacomelli said he had already reduced the use of fertilizer in his current maize crop. He said he would do the same if he planted soybeans later this year, a move he thought could reduce his yield by at least 8%.
Giacomelli said fertilizer was hard to find and that some retailers would not complete the sale until cargo ships arrived in Brazil. He still refuses to stop buying negotiations before Russia invades Ukraine. “I was frustrated and now I’m paying more,” Giacomelli said.
Lawmakers, on the other hand, from Brazil’s farm provinces, are demanding legislation that will open up indigenous areas of the Amazon for potash mines. The move is opposed by members of the local Mura tribe, who say the mines will damage the natural environment they rely on. The bill is still being passed by the national conference.
An agricultural worker displays fertilizer before spreading it in a soybean field, near Brasilia, Brazil, in Feb. 15.
ewer acres, small manure
In the United States, fifth-generation New Mexico farmer Mike Berry has similar concerns. He recently paid $ 680 a ton of liquid nitrogen to fertilize his maize crop, a “very expensive” amount which he said was more than 232% last year.
Berry said he plans to prune his spring maize crop to feed livestock to about 300 hectares from his 400 to 600 hectares. Berry said he would also reduce the use of liquid nitrogen by about 30%, which could reduce his yield by 25%.
Conclusion: “We will produce less,” he said.
That may seem short-sighted given the recent drop in commodity prices. But the cost of planting crops exceeds the potential cost to many farmers.
“Investment decisions are increasingly being made not by market basics but by price-driven production and supply of fertilizers,” a number of U.S. lawmakers wrote in a March 17 letter to the U.S. International Trade Commission. They wanted exemption from the importation of fertilizer from Morocco and Trinidad and Tobago.
American farmer Don Batie described the stressful process of getting enough fertilizer to plant this year.
A farmer prepares to use urea fertilizer in his cornfield of La Planche near Nantes, France.