USDA: The war in Ukraine adds to the risks of the fertilizer market

Global fertilizer prices are near record highs and may remain high through 2022. This may negatively affect agricultural production in 2023 as well, according to a report by the US Department of Agriculture (USDA).

As noted, fertilizers account for 20-35% of production costs, depending on the crop.

“The Russian invasion of Ukraine has worsened the already limited situation with fertilizer supplies and caused restrictions on imports and exports, increasing the risk of shortages,” the report said.

Experts say that China, Russia, the United States, India and Canada together produce more than 60% of the world’s fertilizer nutrients. The increase in fuel prices has led to a reduction in output as early as 2021.

Russia’s war against Ukraine led to the introduction of trade restrictions and reformatting of logistics chains.

The USDA emphasized that the fertilizer sector is vulnerable to disruptions because there are few exporters. Five countries/regions export more than 60% of all fertilizers — Russia, Canada, the European Union, China and Belarus. At the same time, Russia and Belarus account for almost 25% of the global export market of all fertilizers.

As a result, fertilizer importers reduced their purchases, and this will probably have a negative impact on the harvest, because farmers will have to revise application rates and sown areas.

“Global prospects for 2023 look even more dire. As the Russian-Ukrainian war continues and fertilizer supplies remain tight, high prices are likely to have a stronger impact on planting decisions in 2023,” the USDA predicts.