During the Covid-19 pandemic, like many products and services fertilizer prices have been impacted by global supply chain challenges. There are many key factors behind the global fertilizer crisis. First, trade restrictions in 2020 led to drop off in fertilizer exports that imposed on Belarus by America and the European Union (EU). Meanwhile trade restrictions from China, Turkey, Egypt and Russia caused on a decrease in fertilizer exports in the second half to 2021.
In Fabruary 2022, Russia’s invasions of Ukraine exacerbated the burden on fertilizer production. Russia is the world’s top fertilizer exporter providing around %15 of nitrogen-based fertilizer. Financial sanctions imposed on Moscow from the West and transportation challenges which is caused by the war led to a sharp decline in exports. At the same time rising natural gas prices caused a decline in production of fertilizer. Natural gas is also majör Russian export and crucial ingredient in making nitrogen-based fertilizer. Increase in the price of natural gas has increased production costs and caused an increase in food prices. The chart below shows the increasing prices in meat, dairy, cereals and vegetable oils since 2020. According the chart overall prices hit around 40%.
Considering the world bank analysts’ assumptions there will be no easing in food prices until 2023.
Sources: https://www.cnbc.com/world/?region=world
https://www.wsj.com
