By asking its domestic fertilizer producers to stop exporting, Russia is driving fertilizer prices to new heights and exacerbating food inflation on a global scale. A shock wave that should affect Canadian farmers.
“In terms of replenishment [d’engrais] Russia is normally one of the sources for eastern Canada,” explained Casper Kaastra, CEO of Sollio Agriculture, in an interview with Homework the same day that Russia launched its offensive in Ukraine.
The country is indeed a “significant source on a global scale” both for nitrogen-based fertilizers and for those made from phosphorus or potash, he explained. In fact, Russia alone accounts for 23% of ammonia export, 14% of urea, 21% of potash and 10% of processed phosphates, according to figures from the Fertilizer Institute.
However, the Russian news agency TASS reported on Friday that Russia may well suspend fertilizer exports. Russia’s Ministry of Industry and Trade reportedly recommended domestic fertilizer producers — PhosAgro, Uralchem, Acron and EuroChem — suspend exports until shipping services resume normal.
Russia would thus respond to the announcements of the maritime giants AP Moller-Maersk and MSC, which last week suspended all deliveries to and from Russia.
In the context of this conflict, the impacts for Canadian farmers are difficult to assess, indicated Mr. Kaastra, pointing out that they were different according to the types of fertilizers. The impact should be “almost non-existent” for potash-based fertilizers in eastern Canada: “The product we use comes from potash mines in western Canada. »
He added: “For the others [types d’engrais] on the other hand, urea or nitrogen often come from Russia. And this is the case from time to time for phosphorus-based fertilizers. »
In the short term, “we believe we are able to meet demand for the start of the season, more than for the end of the season”, he underlined, specifying that eastern Canada has rail and maritime infrastructures facilitating access to other sources of supply. “We have options. It can come from China at times, from the United States by boat or by train. In western Canada, there is manufacturing of nitrogen-based fertilizers as well. »
Rising prices
If the availability of fertilizers depends on the evolution of the conflict in the coming weeks, their price is already reaching peaks. For example, the price of anhydrous fertilizer, which hovered around US$500 per ton in 2020, has steadily increased in 2021 to reach US$800 in October. And since then it has been catapulted to 1500 US dollars per ton.
An increase that has had a direct impact on food prices. The Food and Agriculture Organization of the United Nations (FAO) Food Price Index is at record highs. In February, it was up 24.1% from its level a year ago and up 3.9% from January.
In addition to a drop in grain supply, FAO economist Upali Galketi Aratchilage noted on Friday, a much larger push in food price inflation is coming from external factors, “particularly from the energy, fertilizers and animal feed”.
In a statement last week, The Fertilizer Institute said: “Currently, the exact extent and how the Russian-Ukrainian conflict will affect the already strained global fertilizer market is unclear, but it will add further pressure. in a market that has already experienced many challenges over the past eighteen months. »
The Canadian potash giant, Nutrien, plans to increase its production rate to meet demand. “We are looking very closely, if the situation continues, how to deploy more miners and how to operate new sites,” said the company’s interim CEO, Ken Seitz, during an investor conference. from BMO Capital Markets last week. Nutrien expects to sell up to 14.3 million tonnes of potash in 2022, which would be a record year.