Here’s How It’s Squeezing The Food Supply And Farmers

Fertilizer prices have gone parabolic, rising as much as 40 percent and threatening the world’s food supply and farmers’ margins as the war in Ukraine sends energy costs soaring.

According to Morgan Stanley, Russia and Belarus together provide about 40 percent of the world’s exports of potash, which is used primarily (95 percent) as an agricultural fertilizer.

Some European potash plants have stopped or slowed production. Potash is a key nutrient for major commodity crops such as corn and soybeans.

Farmers say they are worried that skyrocketing fertilizer prices may force them to rotate crops or use fewer nutrients, which could reduce crop yields, CNBC reported.

Sanctions against Russia after its Feb. 25 invasion of Ukraine have hurt its exports. In February, a Belarusian potash miner declared force majeure — a statement that it wouldn’t be able to uphold its potash contracts due to forces beyond its control.

Russia also exports 11 percent of the world’s urea and 48 percent of the ammonium nitrate — both used in fertilizer. Together, Russia and Ukraine export 28 percent of fertilizers made from nitrogen, phosphorous and potassium.

“Higher fertilizer means costs of production globally will increase, which could alter which crop is grown,” the U.K.-based farmer supply chain team AHDB team said in a March 11 market commentary.

“Yields could be lower if farmers choose or are forced to reduce fertilizer applications, potentially impacting global production.”

The U.S. is a large consumer of fertilizer and a large producer of corn, soybeans and wheat, according to the American Farm Bureau Federation.

A report estimates U.S. farmers intend to plant a record 91 million acres of soybeans and more than 89 million acres of corn in 2022.

Retail fertilizer prices tracked by Progressive Farmer/ DTN for the last week of March 2022 were moving significantly higher, with some seeing double-digit price gains compared to the previous month.

The phosphorus fertilizer price was 17 percent higher, averaging $1,033 per ton, the highest in the history of DTN’s data set. Potash was 15 percent higher, while MAP (monoammonium phosphate) was 12 percent higher.

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Farmers in Colombia, Tennessee, told News Channel5 that they expected the cost of fertilizer to more than double this year, hurting their yields and margins.

“Our fertilizer bill usually runs on average around $75,000, but this year we’re looking closer to $200,000,” said James Harlan, a fourth-generation corn and soybean farmer.

“You have to look at agriculture not as a local industry, but as a global industry, and what happens across the water in these different areas of the world are definitely going to impact areas here locally,” he said.

Photo: Fertilizing a field, April 26, 2019, U.S. Department of Agriculture, https://www.flickr.com/photos/usdagov/

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