In Brazil, the largest exporter of coffee, one grain producer is still waiting for the deliveries of fertilizers that he paid for five months ago. After losing about 40% of his crops due to drought, his farm was hit by frost. The plants are under great stress and he worries that the production of the upcoming season will be even worse than the previous one if he does not get the necessary fertilizers. However, he is not the only one. The situation with the lack of fertilizers has put farmers around the world at a disadvantage.
Fertilizer is so important for Walter coffee trees, grain production cannot be imagined without it. And now it’s harder than ever in his 20 years of farming. The world is facing record fertilizer prices in the latest threat to food availability.
Problems could not come at a worse time for agricultural supply chains. Global food prices have risen by more than 30 percent in the last 12 months and reached the highest level in a decade. Climate change is destroying crops, and the pandemic has threatened production.
Meanwhile, about a tenth of the world already lacks enough food. The fertilizer crisis means that the main crops, corn, rice and wheat, are in additional danger.
Why is there no nitrogen fertilizer?
Nitrogen-based fertilizers are the most important nutrients for crops, and they are produced through a process that depends on natural gas or coal. However, at the moment there are not enough of these fuels. And that is forcing fertilizer factories in Europe to reduce production or even, in some cases, close.
China, meanwhile, has restricted exports to ensure enough domestic supply. This, along with increased freight rates, increased tariffs and extreme weather conditions, disrupted global deliveries.
Consequences of lack of fertilizers on food production
The whole situation with the lack of fertilizers and how it affects the world food supply. Namely, all the food we eat is on our tables thanks to the nitrogen fertilizers used in the production of that food.
Thus, wheat prices jumped to the highest level since 2012, coffee is close to multi-year highs, and the price of corn also jumped.
About a third of coffee producers in Brazil do not have enough fertilizer. In the United States, some corn growers face prices that are twice as high as those they paid last year. In Thailand, rice farmers are urging the government to intervene in a growing market.
And the world’s two largest fertilizer manufacturers, Nutrien Ltd. and Mosaic Co., said they expect prices to continue rising.
“Farmers could pass on higher fertilizer costs to consumers in the form of lower crop production and consequent higher food prices,” said Alexis Maxwell, an analyst at Green Markets, a Bloomberg-owned company.
Latin American coffee and American corn are threatened by shortages
About 30% of Brazilian coffee farmers have not received the fertilizer they ordered, or cannot buy it. That could lead to losses in the next two years because the land may not get enough nutrients to support the development of plants that will produce beans in the crop in 2023, he said.
In Peru, meanwhile, urea deliveries are as late as three months, and its price has tripled from $ 20 per 50-pound bag to $ 60, said Lorenzo Castillo, director general of the National Coffee Board. That will absolutely harm next year’s yield, because growers will not be able to afford as much as they would normally use, he said.
For many coffee producers in Latin America, higher costs come at a time when weaker local currencies make import inputs more expensive.
In the US, high fertilizer prices could mean lower corn yields and increase corn production costs by 16%
In mid-October, the offer of 880 dollars per ton was 75% higher than the 504 dollars per ton it was last year. Just two weeks later, the price jumped to $ 1,320.
European wheat is also under attack
Europe is among the regions hardest hit by the energy crisis, and this is reflected in the availability and prices of fertilizers.
Rising natural gas prices have forced a number of nitrogen fertilizer plants to halt or reduce production, including Norway’s Iara International ASA and Europe’s leading chemical company BASF SE. Gas accounts for about 80% of the cost of producing nutrients, and prices are four to five times higher than usual, according to the industrial group Fertilizers Europe.
Lack of fertilizers could reduce the yields and quality of cereals in the European Union, the world’s largest exporter of wheat and a major supplier of barley.
“Day by day, the risks of shortages in France are becoming clearer,” local agricultural groups said in a joint statement, estimating that rising fertilizer costs could add 4 billion euros to costs for the agricultural sector.
Thai rice – a ton of fertilizer more expensive than a ton of rice!
Rising fertilizer prices will also increase the costs for many rice producers in Asia.
Pramotte Charoensilp, president of the Thai Farmers Association, said fertilizer prices for stocks sold in Thailand are on track to double.
“A ton of fertilizer is now more expensive than a ton of rice,” he said. “The government should intervene.”
In the region, fertilizer prices are very much tied to exports from China. It is a key supplier of urea, sulfate and phosphate, accounting for about 30% of world trade. The market situation has been difficult since the nation imposed new barriers on exporters in an attempt to protect domestic supplies.
Canadian farmers forced to change production
The rise in fertilizer prices came at a particularly inconvenient time for Canadian farmers. Their profits fell last season after a severe drought reduced crops.
So some of them decide to plant crops that need less fertilizer like lentils. Or to rent their agricultural land to cover their expenses in 2022.
Source: Agromedia by www.agromedia.rs.
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