People's Livelihood Investigation Bureau | The price of fertilizers may cause the loss of global food production and the rice is enough to feed 500 million people
Zhongxin Finance, May 9 (Reporter Xie Yiguan) "One cent of fat, one grain of grain; very fat, full of grain."
Fertilizers, a chemical closely related to food production, are becoming an "invisible hand" that threatens global food security as their prices continue to rise.
Data map: Agricultural compound fertilizer is being loaded.
Photo by Wen Jia
Influenced by multiple factors, international fertilizer prices have risen sharply
Recently, CF Industrial Holdings, the world's largest nitrogen fertilizer producer, announced its financial report that the net income attributable to ordinary shareholders in the first quarter was US$883 million, a year-on-year increase of 485%.
The financial report shows that in the first quarter of 2022, the average selling price of CF Industrial Holdings products was US$620 per ton, an increase of 170% compared with US$230 per ton in the same period last year.
“Higher ASPs across all segments are mainly due to strong global demand and lower global operating rates due to rising global energy costs and geopolitical events, reducing supply and tightening the global nitrogen supply-demand balance,” the company explained.
In fact, since 2021, the international fertilizer market has ushered in a sharp rise due to factors such as rising prices of natural gas and other raw materials, and the disruption of the global supply chain due to the epidemic.
From India to Vietnam and the Philippines, prices for crop nutrients crucial to boosting food production will triple or triple in 2021 alone, according to Bloomberg.
After the conflict between Russia and Ukraine, the sanctions imposed by Western countries on Russia and the counter-sanction measures taken by Russia have caused the uneasy international fertilizer prices to make waves again.
On March 10, local time, the Russian Ministry of Industry stated that the country decided to ban the export of fertilizers to "unfriendly" countries.
On March 12, local time, Ukrainian Minister of Food and Agricultural Policy Roman Leshchenko said that the Ukrainian government has decided to temporarily ban the export of all types of fertilizers.
According to an official from the United Nations Food and Agriculture Organization, in 2021, Russia will be the world's largest exporter of nitrogen fertilizers, the second largest supplier of potash fertilizers and the third largest exporter of phosphate fertilizers.
"Since the Ukrainian crisis, global nitrogen fertilizer prices have soared by 40%-50%, and phosphate and potash fertilizer prices have risen by about 30%." Russia's Interfax news agency recently reported.
Fertilizer prices remain high, impacting global food security
International fertilizer markets have tightened and prices have soared, and farmers using less fertilizer could mean less harvests.
According to Bloomberg, the International Rice Research Institute predicts that rice production in the next season could fall by 10 percent, equivalent to a loss of 36 million tons of rice, which could feed 500 million people.
Data map: Pulling seedlings.
Photo by Xiao Xiao
Humnath Bhandari, senior agricultural economist at the International Rice Research Institute, said it was a "very conservative estimate", adding that the impact could be worse if the Ukraine crisis continues.
"There can be no real solution to global food security without bringing Ukraine's agricultural manufacturing industry back into the world market, as well as Russia and Belarus's food and fertilizer manufacturing industries," UN Secretary-General António Guterres said recently.
Supply is tightening, demand is increasing, and domestic fertilizers have also risen significantly
The international fertilizer price is in short supply, and it has been soaring, becoming the "Sword of Damocles" hanging in the global grain market. What about the domestic fertilizer market?
A reporter from Zhongxin Finance reviewed the data of the National Bureau of Statistics and found that the price of urea (small particles) in the national circulation field has risen from 2,210.9 yuan per ton in late April 2021 to 2,934.3 yuan per ton in late April 2022, a year-on-year increase of 32.7% ; The price of compound fertilizer (potassium sulfate compound fertilizer, nitrogen, phosphorus and potassium content of 45%) has risen from 2,487.5 yuan per ton in late April 2021 to 3,861.4 yuan per ton in late April 2022, a year-on-year increase of 55.2%.
Data map: Land trustee staff in Dongzhangwu Village, Anci District, Langfang City are carrying out farming and sowing operations.
Photo by Liu Jianbin
The rise in fertilizer prices has also increased the cost of farmers to grow grain.
"Last summer, it was 130 yuan per bag of compound fertilizer, but it will become 170 yuan in autumn. The price is still high this year. In addition, urea has also risen a lot." Lao Zheng, a farmer in Zhumadian, Henan, told Zhongxin Finance and Economics reporter.
In Yongji, Jilin, a village party branch secretary said that the price of fertilizers has risen by more than 40% compared with the same period last year.
The domestic fertilizer market supply has been relatively stable, why is there a significant rise this time?
"On the one hand, some places have promoted the reduction of fertilizer production, which has reduced domestic fertilizer production. On the other hand, the international fertilizer price has risen sharply last year, and my country's fertilizer exports have increased, resulting in a tighter domestic fertilizer market supply." Chinese society Li Guoxiang, a researcher at the Institute of Rural Development of the Academy of Sciences, told reporters.
"In addition, with the rise in food prices, farmers are more motivated to plant, and the amount of fertilizer used has increased, and the price of fertilizers on the market has risen accordingly." Li Guoxiang said.
According to Lao Zheng, "the purchase price of the wheat just sold last month was 1.5 yuan a pound, and last year's purchase price was still 1.2 yuan a pound."
In addition, the increase in the import price of fertilizer raw materials is also a factor.
Taking potash fertilizer as an example, domestic potassium chloride is currently more dependent on imports. According to Chinese customs data, domestic potassium chloride imports will be 7.57 million tons in 2021, accounting for 83.28% of the 9.09 million tons of fertilizer imports in the same period.
Data map: neatly stacked potash fertilizer ton bags.
Photo by Li Shengyan
Constrained by the tight supply of domestic and international fertilizer markets, my country's fertilizer imports and exports decreased significantly in the first quarter of this year.
However, with the increase in prices, the import and export value of fertilizers, especially the import value, increased significantly. The total import value from January to March increased by 39.7% year-on-year.
Country shot! Guarantee supply and price, reduce the burden on farmers
High fertilizer prices have brought a lot of burden to farmers.
In the face of rising fertilizer prices, the relevant departments have taken action intensively.
Following an interview in the second half of 2021, the National Development and Reform Commission reminded key fertilizer companies not to hoard and organize potash fertilizer reserves through low-price auctions. This year's "Government Work Report" has proposed to ensure the supply and price stability of fertilizers and other agricultural materials.
In March, the central government issued a fund of 20 billion yuan to provide one-time subsidies to farmers who actually grow grains, in order to alleviate the impact of increased expenditure on grain production caused by rising prices of agricultural materials.
In addition, 11 departments including the National Development and Reform Commission issued notices to deploy spring ploughing fertilizers to ensure supply and stabilize prices.
"Increased grain purchase prices, coupled with state subsidies, will help ease the pressure from rising fertilizer prices," Li Guoxiang said.
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