Soaring fertiliser prices globally raise food security risks

Key crops, from Brazilian corn to Malaysian durians, are at risk after tight supplies and blistering prices of fertiliser have caused farmers to scrimp on vital crop nutrients, adding to global food security and inflation fears.

Fertiliser costs have soared this year amid rising demand and lower supply as record natural gas and coal prices triggered output cuts in the energy-intensive fertiliser sector. Urea has surged more than 200% this year while diammonium phosphate (DAP) prices have nearly doubled.

With global food prices at their highest in more than a decade, rising fertiliser costs will only add to pressures on food affordability, especially in import-reliant economies. At a time when COVID-19 already decimated the lives and livelihoods of untold millions, soaring food costs are likely to hit the poor hard,”

With the United Nations Food and Agriculture Organization’s (FAO) food price index at its highest since 2011 – when high food prices helped foment the “Arab Spring” uprisings – the world’s farmers are already under strain to increase food supply.

But analysts say fertiliser supply tightness will worsen early next year. European, North American and North Asian farmers all need to step up purchases ahead of spring planting, while key producers China, Russia and Egypt have curbed exports to ensure domestic supplies.

In response, farmers across the world are either delaying purchases or reducing fertiliser use to save money. India and Egypt – both major farm economies – increased government subsidies in November, with India’s fertiliser ministry boosting supplies to districts with low stocks to ensure availability for winter-planted crops.

So far, high crop prices have cushioned the blow for many growers, and some can switch from nitrogen-hungry wheat and corn to soybeans next season. But 2022 doesn’t portend well for farmers. Brazil, the world’s top soybean grower and third-largest corn producer, feeds 10% of the global population. The country has warned of a fertiliser shortage next year that is predicted to slow soy, corn and cotton farm expansions. Even in North America, home to some of the world’s wealthiest farmers, growers have delayed purchases they usually make ahead of spring plantings, hoping prices drop.

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