Global Food Security A Victim Of Russia's Invasion Of Ukraine

The invasion of Ukraine became a jolt to the $250 billion global fertilizer industry as it highlighted the role of Russia and Belarus play as exporters of almost 25% of all world crop nutrients.

Photo Insert: It was Russian fertilizer caught in limbo in the Netherlands that was freed as part of a wider UN deal to allow grain transports via the Black Sea.

While Russia’s agricultural products including the three main types of fertilizer — potash, phosphate and nitrogen — are not targeted by sanctions, exports remain curtailed through a combination of disruptions to ports, shipping, banking and insurance, Alan Crawford, Frank Jomo, Elizabeth Elkin and Matthew Bristow reported for Bloomberg News.

It is the realization that much of the world relies on just a few nations for most of its fertilizers — notably Russia, its ally Belarus, and China — that’s ringing alarm bells in global capitals.

Just as semiconductors have become a lightning rod for geopolitical friction, so the race for fertilizers has alerted the US and its allies to a strategic dependency for an agricultural input that is a key determinant of food security.

That’s pushed fertilizers — and who controls them — to the forefront of the political agenda around the world: The US State Department is beefing up its expertise on fertilizers, presidents are tweeting about them, they’re featuring in election campaigns, and becoming the focus of tensions between countries as well as an unlikely currency of diplomacy. They’re also being pulled into the contest of narratives over who’s to blame for the fallout from Russia’s war on Ukraine.

Russian fertilizer billionaire Andrey Melnichenko, the founder of EuroChem Group AG, argues the European Union’s sanctions regime has clogged up trade to such an extent that it’ll have caused a total curtailment of fertilizer shipments by some 13 million tons by the one-year mark of the war on Feb. 24.

Melnichenko is himself subject to sanctions. It was Russian fertilizer caught in limbo in the Netherlands that was freed as part of a wider UN deal to allow grain transports via the Black Sea.

The batch that began arriving in Malawi earlier in February was the first of several proposed shipments of fertilizer stranded in ports from the Baltic Sea to Belgium and “donated” by Russia’s Uralchem-Urakali Group. Uralchem is planning a handover ceremony with Malawi’s government to be attended by the Russian ambassador on March 6.

The market disruption triggered a spike in prices last summer that led to stockpiling by those able to afford fertilizers, and while costs have since come down significantly, they remain above pre-pandemic levels. Supplies are constrained in poorer areas.

The situation is exacerbated by sanctions on potash giant Belarus alongside the decision by China, a major producer of nitrogen and phosphate fertilizers, to impose restrictions on exports to protect domestic supply, curbs that analysts don’t see being lifted until the middle of 2023 at the earliest.

The result has been an all-too-familiar divide: Bloomberg Intelligence analyst Alexis Maxwell says that even though prices have fallen more than 50% from last year’s peak, farmers in Southeast Asia and Africa remain more exposed than their counterparts in North America, China or India.

The African Development Bank has warned that curtailed use is likely to mean a 20% drop in food production, while the WFP sees smallholders in the developing world at risk of “a major food availability crisis as the fertilizer crunch, climate shocks and conflict upend food production.”

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