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How to manage the world’s fertilizers to avoid a prolonged food crisis
JUERGEN VOEGELE | https://blogs.worldbank.org/
Hidden behind the worst global food crisis in a decade, fertilizer prices have skyrocketed and remain volatile . This poses a serious threat to food security, as the planting season starts this summer. So far, the war in Ukraine has mostly affected countries importing wheat and corn. But many countries, including some major food exporters, are net fertilizer importers. Persistently high fertilizer prices may spread to a broader variety of crops including rice, a staple which has not yet seen war-related price hikes. We must act now to make fertilizers more accessible and affordable to avoid prolonging the food crisis.
efficiency of around 90 percent. Subsidies that encourage excessive use of fertilizers also encourage wastage. Even worse, this has devastating environmental and climate change implications. More efficient use of fertilizers can help ensure available supplies go further, especially to countries most in need. Rich countries consume 100 kilograms of fertilizers per hectare, nearly twice as much as developing countries. Sub-Saharan Africa consumes the least, with about 15 kilograms per hectare.
The World Bank’s fertilizer price index rose nearly 15 percent from earlier this year – prices have more than tripled compared to two years ago. High input costs, supply disruptions, and trade restrictions are driving the recent spike. Natural gas prices started rising last fall as tensions between Russia and Ukraine escalated leading to widespread production cutbacks in ammonia—an important part of nitrogen-based fertilizers. Similarly, the rising price of coal in China, the main feedstock for ammonia production there, forced fertilizer factories to cut production.
There are opportunities to rework public policies and better target scarce public expenditures to create the incentives for more productive and sustainable use of fertilizer. An example of the kind of transformation that is possible are the reforms that the European Union’s 1992 Common Agriculture Practice (CAP) implemented. Prior to these reforms, support to EU’s agricultural sector – such as minimum prices, import tariffs, government purchases – kept EU farm prices above world rates, which encouraged excessive use of fertilizers. With the reforms, support to the EU CAP shifted to direct payments and farm prices became more closely aligned with world prices. These changes increased the To ease the current food crisis, action needs to be taken now to maintain food incentives to use fertilizer more efficiently. production by making fertilizers more accessible and affordable. There are several ways to do this. Third, we must invest in innovation to develop best practices and newer technologies that will help increase output per kg of fertilizer used. This includes First, countries should lift trade restrictions or export bans on fertilizers. Export investing in knowledge to ensure the best suited fertilizer and quantity are aprestrictions make things worse, putting fertilizers further out of reach of poorer plied to specific crops. We must also invest in soil health to maximize the effecdeveloping countries who face the highest levels of food insecurity and hunger. tiveness of fertilizers. Precision agriculture is one example of such improved As of early June, there were 310 active trade measures across 86 countries af- technologies that are already available. Fertigation is another, which combines fecting food and fertilizers, and nearly 40% of these have been restrictive. This fertilization with irrigation, using fertilizers in measured quantities determined number is now approaching levels not seen since the 2008-2012 global food by sensors. But much more can and needs to be done by investing in pushing the price crisis. To facilitate trade, countries can reduce delays and cut compliance frontiers of knowledge to make sure waste is minimized, only the right amount costs by getting rid of unnecessary red tape for importing targeted goods. is applied as is needed for a particular plant at a particular stage of growth. Another option is to supplement conventional fertilizers with viable bio-fertilizers One of the local bottlenecks of global fertilizer trade is the financing needs of and practices. This will not only help with the current supply challenges, but also manufacturers, traders, and importers. In some cases, the financing needs for reduce the impact of fertilizers on the climate, and on soil and water resources. fertilizer buyers have tripled, compounding the general scarcity of local commercial bank financing in many of these markets. Short-term credit facilities Our ability to maintain global trade and the movement of fertilizers will be one and guarantees, mobilized with the support of international development ac- of the determining factors on the length and severity of this food crisis. As farmtors, may be necessary in some cases. ers have started to alter their production due to challenges in fertilizers, policy makers must urgently make the right choices so that the world can cut short the Second, fertilizer use must be made more efficient. This can be done by provid- current food crisis. ing farmers appropriate incentives that do not encourage their overuse. Nitrogen use efficiency, for example, ranges from 30-50 percent in general. Meanwhile, the European Union Nitrogen Expert Panel recommends nitrogen use
TT 163 | August 2nd - 8th | 2022
