Nov 28, 2021

Mawazo Writing Africa

Writing about the main

High fertiliser prices threaten food production amid drought worries

Food insecurity in the region, where multiple conflicts in the Horn of Africa, climate change and socio-economic conditions are already a cause for concern, will only worsen as fertilizer prices rise around the world.

Economists The World Bank have warned that high fertilizer prices could put inflationary pressures on food prices, compounding food security concerns at a time when the Covid-19 pandemic and drought caused by climate change are making food difficult to access / p>

According to the World Bank’s latest Commodity Markets Outlook released Monday, skyrocketing fertilizer prices will be “further rationed as farmers are forced to consume less because it is too expensive,” potentially affecting food production and supply, especially for staple foods, disrupts like corn. Prices are being driven by rising energy costs, supply restrictions and trade policies.

Production cuts

Higher natural gas prices in Europe also led to widespread production cuts in ammonia – an important factor in nitrogen fertilizers – while prices rose for steam coal in China led to rationing of electricity consumption in some provinces, forcing fertilizer factories to cut production.

This is happening at a time when China and Russia, the world’s largest fertilizer producers, are restricting the Exports to support domestic supplies.

China has announced the suspension of fertilizer exports until June 2022 to ensure domestic availability. Its DAP exports account for about a third of world trade. Russia, too, recently announced restrictions on the export of nitrogen and phosphate fertilizers for six months with effect from December 1, 2021.

Fertilizer prices rose sharply in the third quarter of 2021 and continued to rise in early November in the 2008 global financial crisis -2009, said the World Bank.

Globally, the price of DAP (diammonium phosphate), the world’s most widely used phosphorus fertilizer, has risen steadily from the monthly average from USD 603.1 per ton in August according to the analysis $ 643.8 in September and $ 672.9 in October. The price of TSP (Triple Superphosphate) rose from $ 555 per tonne in August to $ 573.8 in September and $ 618 in October.

A spot check of prices in Kenya this week found that a 50 kg bag of fertilizer now costs between Ksh 4,000 ($ 35.67) and Ksh 5,000 ($ 44.58) from Ksh 3,000 ($ 26.75) to Ksh 3,800 ($ 33) .88 US dollars) in May.

In Rwanda, the DAP 50kg sack of fertilizer is available for Rwf 31,650 ($ 31.04) from Rwf 30,750 ($ 30.16) three months ago. The price of a 50 kg sack of urea fertilizer rose from Rwf 22,500 (US $ 22.07) to Rwf 28,000 (US $ 27.46) over the same period, while the price of NPK fertilizer rose from Rwf 32,500 (31, 87 US dollars) to 35,900 Rwf (35.21 US dollars) per 50 kg.

Fertilizer companies – including Norwegian companies Yara and BASF and Borealis – have announced cuts.

However, DAP prices are expected to remain elevated in the first half of 2022 due to the expectation of a tight supply. Fertilizer production in the region has decreased by up to 40 percent.