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As Russian exports disappear, global fertilizer supplies continue to dwindle.

The global fertilizer supply chain is on the verge of collapsing

by Louis Seagray
March 22, 2022
in Current Events, Economy, Government, Opinion, Politics, Russia, Technology, US News, World News
"Kenya: drought leaves dead and dying animals in northen Kenya" by Oxfam International is marked with CC BY-NC-ND 2.0.

"Kenya: drought leaves dead and dying animals in northen Kenya" by Oxfam International is marked with CC BY-NC-ND 2.0.


The global fertilizer supply chain is on the verge of collapsing, as countries prepare for a shortfall in fertilizer supplies as a result of sanctions, embargoes, and other limitations imposed on Russia and Belarus in response to the invasion of Ukraine.

Russia and Belarus together account for nearly 40% of worldwide fertilizer exports. However, practically all fertilizers flowing from Russia and Belarus have vanished as a result of Western sanctions and Russia’s determination to stop all fertilizer exports for the rest of 2022.

“Russia is a major, major exporter across all of the major fertilizers,” noted Josh Linville of StoneX Group. “Urea, they account for 14 percent of the global export total. UAN [urea ammonium nitrate] has been anywhere from 25 percent to 31 percent the last couple of years. Phosphate, 10 percent. They are almost 20 percent of the global operating potash capacity of the entire world.”

In addition, Russia accounts for 23 percent of ammonia exports and 10 percent of processed phosphate exports. Russia is also the second-largest producer of nitrogenous fertilizers and potassium fertilizers and is the fifth-largest producer of phosphate fertilizers.

“They’re a big deal. Losing Russian exports are (sic) Prior to Russia’s decision to stop exporting fertilizer, three of the world’s largest container shipping companies – MSC of Switzerland, Maersk of Denmark, and CMA CGM of France – announced the suspension of all cargo bookings to and from all Russian ports, with the exception of delivering food, medical, and other humanitarian supplies to Ukraine and other Black Sea region countries. a very big deal,” said Linville. “I don’t care where you are on the planet, it matters to you.”

The Fertilizer Institute, a fertilizer industry advocacy group, raised concerns in a statement released earlier this month about the disrupting effect of the lack of Russian fertilizers.

“Because of Russia’s large fertilizer production and its role as a global fertilizer supplier, the removal of Russian product from the global marketplace will have an impact on supply,” the institute wrote. “Despite the benefits afforded by a robust U.S.-based fertilizer industry, prices for our products are driven by global supply and demand factors.”

Prior to Russia’s decision to stop exporting fertilizer, three of the world’s largest container shipping companies – MSC of Switzerland, Maersk of Denmark, and CMA CGM of France – announced the suspension of all cargo bookings to and from all Russian ports, with the exception of delivering food, medical, and other humanitarian supplies to Ukraine and other Black Sea region countries.

This ban also prevents the export of Russian fossil fuels. The country is the world’s second-largest natural gas producer, accounting for almost a quarter of worldwide production. Natural gas is also the primary raw material required to make nitrogen fertilizers, so a natural gas shortage will have a negative impact on global food supply.

The sharp increase in fertilizer prices is one of the principal consequences of the abrupt departure of Russian and Belarusian fertilizer exports. Farmers’ increased expenses just to buy enough fertilizer for their farms are adding to fears about rising global food inflation.


The price of fertilizer jumped nearly 10% to an all-time high on Friday, March 18, according to the Green Markets North America Fertilizer Price Index, as the market remains concerned that the sanctions and other economic restrictions imposed on Russia will disrupt global trade, and thus the global food supply.

Nitrogen and phosphate fertilizer costs have risen, and Linville predicted that they could rise considerably more in the following weeks, depending on how China reacts.

China, like many other countries, is reliant on fertilizer exports to survive. Exports provide 50 to 60 percent of the country’s potash needs, with the majority coming from Russia and Belarus.

 

 

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