BEIJING/SAO PAULO/JAKARTA- Key crops, from Brazilian corn to Malaysian durians, are at risk after tight supplies and blistering prices of fertilizer have caused farmers to scrimp on vital crop nutrients, adding to global food security and inflation fears.
Fertilizer costs soared this year amid rising demand and lower supply as record natural gas and coal prices triggered output cuts in the energy-intensive fertilizer sector. Urea surged more than 200 percent this year while diammonium phosphate (DAP) prices have nearly doubled.
With global food prices at their highest in more than a decade, rising fertilizer costs will only add to pressures on food affordability, especially in import-reliant economies, while stretched budgets leave little room for government subsidies, said Frederic Neumann, HSBC’s co-head of Asian economics research.
“At a time when COVID-19 already decimated the lives and livelihoods of untold millions, soaring food costs are hitting the poor especially hard,” he said. “This raises the risk that higher fertilizer costs will not only hit farmers but will also be passed on to consumers via higher food prices.”
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 fertilizer 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. — Reuters
