The Russian government's decision to suspend fertilizer exports will threaten supplies for farmers in the European Union, South America and Africa while eventually pushing up prices that U.S. farmers must pay, according to analysts.
Reuters reported Friday that the Russian trade and industry ministry recommended fertilizer manufacturers temporarily stop exports of their products.
“Russia is a major low-cost exporter of many kinds of crop nutrients, and no other nation has the same breadth of readily exportable fertilizer supply,” the Canadian trading company Gensource Potash said on its Twitter feed. “Fertilizer scarcity jeopardizes global crop production.”
Belarus - a major source of potash for the EU, South America and the U.S. - is also not exporting its potash because of troubles getting the product through the port of Klaipeda in Lithuania. The U.S. is scheduled to impose steep tariffs on Belarusian potash in April.
The longer the blockage of exports from Russia and Belarus is in place, the greater the impact on farmers around the world, said Sam Taylor, a Rabobank farm inputs analyst. There are signs, he said, that the halt in trade may be long-lasting.
Russia and Belarus say they can’t export, as opposed to a political reaction to sanctions, and that could mean a long-term problem, said Taylor.
“The fact that the (Russian Ministry of Trade and Industry) cites foreign companies as sabotaging (trade) suggests that it is driven upon the Russian government rather than a Russian decision, if you believe what they are saying,” Taylor said. The implication is that international fertilizer traders “are unable to get to the Baltic or Black Sea because of insurance premiums, and that is probably a very viable reality. If that is the case, this could have some longevity.”
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EU countries rely on Russia for about 26% of their urea imports, 26% of their phosphate imports and 21% of their potash imports, says Taylor. Brazil is similarly beholden to Russia, which provides about 46% of Brazil’s potash imports, 20% of the country’s urea imports and 13% of its phosphate imports.
Brazil, the world’s largest soybean producer and exporter as well as a major global source of corn, won’t be planting until much later this year, but the lack of fertilizer supplies from Russia as well as Belarus could have a major impact.
The impact of a Russian fertilizer ban could have an outward effect on African countries that can least afford the disruption and have less access to alternatives, says Joe Glauber, a senior fellow at the International Food Policy Research Institute and former USDA chief economist.
European farmers are in danger of being hit especially hard, said Taylor, but he stressed the availability of natural gas will also be key for the region’s ability to produce its own nitrogen.
“Natural gas prices are at points so high that there is a risk to production being curtailed in Europe,” Taylor said.
The U.S. is much less reliant on imports than Brazil, but American farmers were already dealing with high fertilizer prices and that could worsen, said Glauber.
“It’s already really expensive,” Glauber said. “Input costs have gone through the roof even prior to the invasion of Ukraine.”
Taylor agreed, saying, “It’s hard to see this isn’t anything but inflationary.”
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