Ana Mano, Tom Polansek & Tom Polansek

CHICAGO, (Reuters) – Farmers worldwide are cutting down on the use of fertilizers and reducing land that they plant. The rise in prices has been caused by the conflict between Ukraine and Russia. Some agricultural industry experts warn of food shortages.

Western sanctions against Russia, which is a large exporter of soil nutrients such as potash and ammonia, have caused shipments to be halted around the world. The key ingredient to maintaining high yields of wheat, corn, soybeans, rice, and other nutrients is fertilizer. The growers have to adapt.

Brazil’s agricultural powerhouse Brazil has seen the pivot. Some farmers have reduced their fertilizer use and federal legislators want to protect indigenous land for potash mining. Small farmers in Zimbabwe and Kenya are using manure as a way to feed their crops. Canada’s canola farmer already has fertilizer ready for 2023 in case of higher prices.

Other farmers are also making similar moves. Reuters interviewed 34 people from six continents. These included grain producers, agricultural analysts, traders, and farm groups. All were concerned about the availability and cost of fertilizer.

The United States’ fertilizer bill is expected to increase by 12% in 2019, after growing 17% in 2021 according to American Farm Bureau Federation data and U.S. Department of Agriculture data.

Many growers have considered switching to less-nutritious crops. Others will cultivate less land. Some say that they will use less fertilizer. Experts predict this strategy will reduce yields. Tony Will, the chief executive officer of Illinois’s CF Industries Holdings, a major producer of nitrogen fertilizer, stated that developing countries are most vulnerable because their farmers don’t have as much financial support to weather the storm.

Will said that his concern is a worldwide food shortage.

Peru declared a State of Emergency in its Agriculture Sector on Saturday due to fears about food insecurity.

The decree said the nation’s planted areas have fallen 0.2% since August due to rising fertilizer prices, and that the volume of grain Peru imports for animal feed has likewise declined over cost concerns. A plan is being developed by the government to improve food availability. DOUBLE WHAMMY Before Russia invaded Ukraine on February 24, fertilizer prices had been high. Record and rising coal prices caused some fertilizer producers to reduce their output in this energy-hungry area. Ukraine’s cities have been besieged by missiles, tanks and troops in what Moscow has dubbed a “special operation” to demilitarize the country. Russia denied that it targeted civilians during the conflict.

The West responded by imposing economic sanctions against Russia. Meanwhile, the United States of America and the European Union placed new sanctions on President Alexander Lukashenko in Belarus, which has been supporting Russia’s offensive.

Together, Russia, Belarus and China accounted to more than 40% global potash exports in 2013. Potash, which is one the three essential nutrients needed for crop growth, was reported by Rabobank (Dutch lender). Russia was responsible for approximately 22% global ammonia exports. It also exported 14% world urea and around 14% monoammoniumphosphate, which are all important types of fertilizers.

Russia has been embargoed on the import of fertiler and other crops. Many Western merchants and traders have stopped buying Russian goods outright, fearing that the rules will change rapidly. Shippers are also avoiding the Black Sea Region due to safety concerns.

This is a double win for global food supplies.

Russia and Ukraine are the two largest grain producers. These two countries together make up about 30% and 20% respectively of the world’s wheat exports. Already, grain shipments via the Black Sea were disrupted. The halting of deliveries from both these countries has contributed to a soaring global food inflation. According to the World Bank, a large number of developing nations are facing short-term shortages in wheat supplies due to high dependency on Ukrainian exports.

Maximo Torero (chief economist at the U.N. Food and Agriculture Organization) said that the concern about the fertilizer crisis could be even more concerning because it may prevent food production elsewhere in the world.

“If the problem with fertilizer is not solved and fertilizer trade ceases, we will have serious problems.” ()Torero stated to Reuters, “supply next year.” BRAZIL AT RISK The world’s largest exporter of soybeans, Brazil, relies heavily upon imported fertilizers, such as potash. This account accounted for 38%. Half of these shipments came from Russia and Belarus.

Brazil’s farmers had been reducing their corn production for years before the conflict between Ukraine and Russia. This was due to higher fertilizer prices. Agroconsult, an agricultural consultancy firm in Brazil, says that soybean production will be affected as well. The growers are likely to expand less slowly than previous years.

Cayron Giacomelli, a farmer in Mato Grosso’s west-central region said that he had already cut back on fertilizer usage for his corn crop. According to him, the move could shrink his crop by up to 8% when he plants soybeans later in the year.

Giacomelli claimed that fertilizer is difficult to find and that many dealers will not close sales until Brazil’s cargo ships dock. The fact that Giacomelli didn’t close a deal he was trying to negotiate just before Russia invaded Ukraine is something he still regrets. Giacomelli stated, “I was distracted” and that he now pays more.

Brazilian lawmakers are pushing legislation that would allow indigenous land in Amazon to be used for potash mining. Members of the Mura tribe in the area oppose this measure, arguing that mining could devastate the environment upon which their lives depend. This bill is still being worked through by the national congress.

Zimbabwe’s lack of cheap imports and high prices have forced many corn farmers, such as Boniface Mutize in Zimbabwe to produce their own fertilizer. He explained that zinc is made from chicken or cow waste and mixed with dung.

In rural Kenya, it’s similar. Mary Kamau, a farmer, said that she too has cut down on commercial fertilizer purchases and uses manure to feed the avocados and coffee she cultivates in Murang’a County. Her family is worried about her worries. “If I don’t get a good harvest, I don’t get good prices. And that will affect me for the next two years – it’s not just this season,” Kamau said.

FERTILIZER: FEWER ACRES.

Mike Berry, a fifth-generation New Mexico farmer has the same concerns in America. The price of liquid nitrogen to fertilize his corn crop was $680 per ton, which he claimed was 232% more than the last year.

Berry indicated that he intends to reduce the size of his spring plantings, which he estimates will be 300 acres. This is in addition to his normal 400 to 600 acres. Berry also stated that he plans to reduce his use of liquid nitrogen by 30%. This could result in a 25% drop in yields.

The bottom line is: We’re going produce less, he stated.

It might sound a little too optimistic considering the recent sharp rise in commodity prices. Many farmers are losing out on potential income due to the high cost of cultivating crops.

In a letter to U.S. International Trade Commission dated March 17, dozens of U.S. legislators wrote that “Planting decisions have been increasingly made on basis of market fundamentals rather than on the cost and availability of fertilizer.” They wanted to be exempted from the duties that were imposed on imports of fertilizer from Trinidad and Tobago and Morocco.

Don Batie from the United States described the difficult task of procuring enough fertilizer to plant this year.

Batie said, “It is nuts.” He grows soybeans and corn on 1500 acres of Lexington, Nebraska. “The price of the product changes as soon they receive a quotation and a price.”

WHERE TO BUY

Asia also faces difficulties

India is increasingly looking at Canada and Israel as a source of fertilizer in order to replace the Russian supply.

Thailand is currently under pressure to grow its rice crops. The Thai government has shown that Belarus and Russia accounted for approximately 12% each of the fertilizer imports it made last year. But purchasing from other countries could be tricky because of domestic price controls for fertilizer that are squeezing Thai exporters, as well as rising global market prices, Plengsakdi Prakaspesat (president, Thai Fertilizer and Agricultural Supplies Association) said.

“If you’re a merchant, and you’re absolutely going to lose money, will you still import more stuff?” Plengsakdi said.

China imposed export restrictions on fertilizer last year to help protect its farmers, as prices rose due to high demand and rising energy prices. According to Gavin Ju (principal fertilizer analyst at the Shanghai office CRU), Beijing would likely ease these restrictions, possibly boosting global supply. However, he stated that it’s unlikely now because of the chaos in global markets.

Some farmers are making plans for the future due to concerns about rising inflation and prolonged Ukraine war.

Bert Peeter, a Manitoba corn and canola farmer, recently agreed to pay more than $500,000 Canadian Dollars for 80% fertilizer. This was in 2023. He considered that even though prices have risen, they could get worse.

Peeter explained that the “might not end after one year.”