The world faces fertilizer shortages due to disruptions in food and logistics chains and high energy prices.
Oleg Kobyakov, Director of the United Nations Food Organization (FAO) Office for Relations with Russia, warned that next year, the world will likely face a shortage of fertilizers. This is due to disruptions in the food and logistics chains and high energy prices.
Fertilizer shortage is actually a shortage of food. “If we don’t normalize the fertilizer market, we will have a food problem by 2023,” warned United Nations Secretary-General António Guterres.
The International Association of Producers predicts that farmers will reduce fertilizer use by 7%.
According to the Italian newspaper Corriere della Sera, the United Nations is in talks with Moscow and Kiev to try to solve the problem of ammonia supply from Russia through Ukraine. This is essential for fertilizer production.
In 2022, prices in the global fertilizer market have increased sharply. This is due to the destruction of logistics supply chains due to sanctions imposed on Russia, as well as the energy crisis in Europe. In the current context, the global fertilizer market may be in short supply.
In fact, there are no sanctions on Russia’s fertilizer sector, but most foreign companies that carry out transport refuse to enter Russian ports, and financial institutions cannot make payments. can calculate. Facing that situation, Russia has imposed a restriction on fertilizer exports, and this also affects the price increase.
In Europe, which is experiencing the most acute energy crisis, fertilizer production has fallen by 70%. In the UK, production of ammonium and ammonia has been suspended by US company CF Industries Holdings. In Lithuania is the Acema factory. In Poland, the chemical company Grupa Azoty has stopped producing nitrogen fertilizers, caprolactam and polyamide-6. German company BASF began cutting ammonia production in the summer, while another major German producer, SKW Piesteritz, has also reduced its load.
If energy prices do not fall, the world will face a severe shortage of nitrogen fertilizers, which by some estimates could amount to more than 10% of production. No excess capacity on the market can replace lost supplies.
Two-thirds of the total supply in the global potash market is supplied by three countries – Canada, Russia and Belarus. Canada produces about a third of the world’s potassium supply, while Russia and Belarus together produce another third. With limited supplies from Russia and Belarus, Canadian companies are making record profits.
The main consumers of all three fertilizers are seed producers. Of these, most fertilizers are needed for growing corn, wheat, and rice. A lack of future crops will lead to an explosive increase in world food prices, inflation and hunger.
The lifting of sanctions, the establishment of a logistics chain, the restoration of gas supplies to Europe from the Russian Federation will solve all problems in the fertilizer market, and will defuse the energy crisis. But at the moment there is no suggestion in this direction.
For Russia, there are no problems in terms of fertilizer or yield in the country. The amount of fertilizer produced is enough to meet domestic and export demand. High grain production has contributed to keeping domestic prices more or less stable.