US farmers facing serious risk if fertilizer costs not mitigated

By Al Mayadeen Net
Source: Agencies
14 Apr 2022 09:50

Farmers in the US may face a significant risk if crop prices drop before the fall harvest amid rising fertilizer costs.

Farmers may be able to offset their costs by selling their products at higher prices (Reuters)

If US farmers fail to take steps to mitigate the surge in fertilizer costs, then they will be at significant risk if crop prices fall before the fall harvest, according to Kansas Farmers Union President Donn Teske.

The rise in fertilizer prices began even before the conflict in Ukraine. However, price surges have been even more dramatic since Russian suspended fertilizer exports, which account for over 12% of the fertilizers imported by the US in 2021.

In order to mitigate rising costs, farmers will need to sell their products at higher prices, thereby increasing food costs at the end of the supply chain.

Some fertilizer and nutrient prices increased as much as 300 percent last year, according to the American Farm Bureau Federation (AFBF). The AFBF attributed the price rise to rising energy costs, supply chain disruptions, increased demand for fertilizer, and the high prices for raw agricultural nutrients.

Teske said he has no clear idea about what may be causing the increase in prices but speculates that fertilizer companies may be taking advantage of the opportunity.

UN: Russia-Ukraine conflict could cause global food shortage

Director-general of the United Nations Food and Agriculture Organization, Qu Dongyu, said on March 12 that disruption to agricultural production in Russia and Ukraine could seriously exacerbate global food insecurity.

In a statement issued on Friday, he outlined how the two countries play a significant role in the world's food production and supply.

“Russia is the world’s largest exporter of wheat, and Ukraine is the fifth-largest. Together, they provide 19% of the world’s barley supply, 14% of wheat, and 4% of maize, making up more than one-third of global cereal exports,” he stated.

Qu also added that the two countries are the world's leading suppliers of rapeseed and account for 52% of the world's sunflower oil export market. The global fertilizer supply is also highly concentrated, with Russia leading the way.

Furthermore, he explained that supply chain and logistical disruptions in Ukrainian and Russian grain and oilseed production, as well as Russian export restrictions, will have a significant impact on food security.

“This is especially true for some 50 countries that depend on Russia and Ukraine for 30% or more of their wheat supply,” Qu said.