Global Food Crisis Looms as Fertilizer Shortage Worsens

A fertilizer shortage affecting countries around the globe is threatening to make the already severe global food crisis even worse. Fertilizers are manufactured using three main ingredients: potassium, phosphorus and nitrogen. They are usually used to improve soil fertility by introducing the nutrients needed by plants that are missing or not adequate into the soil.

United Nations officials have given more warnings about the looming fertilizer crisis, as vulnerable nations in continents such as Africa deal with the significantly higher prices. Smallholder farmers on the African continent feed the majority of the population. Data from the African Development Bank shows that the continent is already short of two million metric fertilizer tons.

Since the invasion of Ukraine by Russia, the price of fertilizers has increased by about 300%. It is expected that the high price will increase the cost of food considerably, with the war along with extreme weather only increasing uncertainty within countries.

Earlier this year, the African Development Bank stated that most nations on the continent had already seen increases in the prices of bread and other food items. The bank warned that if the deficit wasn’t corrected, the production of food on the continent would drop by no less than 20% and Africa could lose more than $11 billion in food production value.

However, David Beasley, the UN World Food Program’s executive director, noted that the 20% estimate could be low, explaining that more than 900 million individuals on the continent depended on smallholder farms and fertilizers. The European Commission states that even before the invasion of Ukraine, the price of fertilizer was high. It explains that the invasion caused a further 50% increase, given Moscow’s huge role in the global fertilizer market.

Currently, Russia is the largest exporter of nitrogen fertilizers globally, the second largest potassium supplier and the third largest exporter of phosphorus fertilizers around the globe.

In addition to the price of fertilizer increasing, the cost of shipping and energy prices have also increased. Producers of fertilizer in Europe expect shortages of natural gas imports from Russia continue decreasing.

It doesn’t help that the sanctions the European Union has imposed on the Kremlin have made things worse. The EU limited potash imports and other combined fertilizers from Belarus and Russia, which prompted Russia to in turn limit fertilizer exports until the end of 2022.

Farmers will likely find it hard to cover their costs if the price of fertilizer continues to increase, which will extend the hunger crisis.

The ongoing shortage of fertilizers around the world has created a huge demand for the fertilizers manufactured by North American-based companies such as Compass Minerals International, Inc. (NYSE: CMP), and they are likely to deliver great value to their shareholders.

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