In an atmosphere of general disapproval – Newspaper Kommersant No. 211 (7412) dated 11/15/2022

The WTO and the UN FAO released yesterday a joint study of the situation on the global fertilizer market. From the point of view of experts, the restriction of trade in them aggravates the situation on the global food market, significantly reducing the growth in the productivity of the agro-industrial complex, and realistic scenarios for the development of events do not give grounds for hopes for a quick exit of the market from the impasse. As a result, the UN’s plans to combat hunger are likely to fail. To overcome the crisis, analysts recommend that farmers rely on their own strength in the form of saving fertilizers, searching for innovations and developing “sustainable farming” – and, which looks less realistic, strengthening the fight against protectionism and barriers to world trade.

“Until 2030, the deadline for achieving the UN sustainable development goals, there are eight years left, but about 670 million people – 8% of the world’s population, will experience food shortage or hunger by this point in the world, the same number as in 2015, when these goals were set,” WTO and FAO analysts state, describing the circumstances of the crisis in the food and fertilizer market after 2020. Agrochemicals are often the only way to increase food production, which in turn increases demand and drives up food and food prices; this, in turn, again increases the demand and prices for fertilizers. According to the FAO Food Outlook on November 11, global food import spending will rise to a record $1.9 trillion in 2022, up 10% from the previous record in 2021, and the situation is likely to worsen in 2023. increasing and stratification: the imports of poor countries will decrease in 2022 by the same 10% due to rising prices.

The rise in prices for mineral fertilizers was triggered by “covid” restrictions on international supplies in 2020-2021, and the process does not stop: for example, prices for urea (one of the basic nitrogen fertilizers) in the Black Sea ports more than tripled, from $215 per ton in January 2020 up to $678 per ton in September 2022; the same dynamics was demonstrated by phosphorus, potash and combined, while in 2022 it was already dictated by geopolitics — including the short-term imposition of US sanctions on supplies from the Russian Federation (quickly lifted), logistical restrictions in connection with the military operation of the Russian Federation in Ukraine and trade barriers, which began to enter countries to protect domestic markets. The FAO and the WTO note that they do not expect positive things in the first half of 2023 “due to low stocks and a greater likelihood of introducing new supply restrictions.”

Russian supplies of fertilizers to the world market can serve as an example: WTO and FAO analysts suggest that they will continue to decline, including due to the authorities’ plans to introduce export duties on fertilizers, which will cost manufacturers 105 billion rubles. in 2023 (see Kommersant dated September 14). Export earnings (due to rising world prices) still provide the sector with high profits (the WTO estimates monthly sales of the sector at $1.6 billion in 2022 against $700 million in 2021), but the production and export of mineral fertilizers in Russia continue to fall, and alternative markets and growth in domestic consumption do not compensate for this drop – according to experts, it can range from 5% to 15% for various types of fertilizers. At the same time, the agro-industrial complex of the Russian Federation, which has the same problems with exports, requires a reduction in domestic prices for agrochemicals (see Kommersant of October 19).

According to the WTO, if the Russian Federation reduced export shipments in 2022 by only 5–10%, then Belarus (also a major supplier of potash fertilizers to the world market) more than halved, to 1.95 million tons in the first half of the year from 3.62 million tons a year earlier.

As a result, experts do not expect a way out of the deadlock earlier than in a few agricultural seasons, and in fact admit that they have no realistic recommendations for accelerating the resolution of the crisis: the idea of ​​refusing to subsidize the purchase of fertilizers by domestic producers (it reduces the competitive advantages of highly productive farmers) and not building new barriers (duties) are not new, but they are unlikely to be implemented, and the ideas of “saving” fertilizers, switching to organics and searching for agro-innovations are unlikely to bring quick success.

Oleg Sapozhkov