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When Russia invaded Ukraine in February 2022, fertilizer prices were already high. The coronavirus (COVID-19) pandemic has tested the world’s ability to produce and deliver fertilizers, with supply chain and transportation disruptions. Fertilizer prices in August 2021 are 25 percent higher than in March 2021. In early 2022, Russia’s attack led to additional traffic disruptions and new trade restrictions in the Black Sea region. This reduced an already insufficient supply of fertiliser, causing prices to rise by more than 50% between February and April 2022.
Current State Of Russia's Economy
Because fertilizer is needed for grain production, shortages and high prices affect the entire food supply chain. According to 2022 Commodity Prices and Returns data from the USDA Economic Research Service, fertilizer costs for U.S. wheat and corn farms are about 45 percent, compared to 23 percent for U.S. soybean farms. In response to the high cost of waste, farms may adjust their production practices. They can reduce the acreage of certain crops by using fertilizer left over from the previous growing season or switch fields to crops such as soybeans that require less fertilizer. For example, in 2022, U.S. acreage decreases for corn and wheat, but increases for soybeans. Some may reduce fertilizer use, which can lead to lower yields and higher market prices.
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Fertilizer prices fell as the Black Sea conflict entered its second year, but trade tensions continued to add uncertainty to global markets. In June 2023, the USDA reported increases in corn and wheat plantings, while soybeans remained flat. In addition, share prices rose, supporting these predictions.
In 2020, the most recent year for fertilizer trade data, Russia and neighboring Belarus were the world’s top fertilizer exporters, accounting for 20% of the world’s three main types of fertilizer: nitrogen, phosphate and potassium. China has the second largest export share at 12.2%, followed by Canada, the United States and Morocco. According to the World Bank, Russia accounts for 16% of urea (a source of nitrogen) exports and 12% of phosphate exports. Russia and Belarus together account for 40% of world potash exports. In 2020, the United States is one of the main destinations for Russian and Belarusian fertilizers, along with Brazil, China and India. Although the United States is a large producer of nitrogen and phosphate, it also imports significant quantities of Russian potash.
Trade restrictions disrupted the flow of fertilizers before the Ukrainian invasion. In 2021, a year before the conflict began, the European Union (EU) and the United States imposed sanctions on potash imports from Belarus, and China banned the use of phosphate as a soil fertilizer in July 2021. In February 2022, following Russia’s invasion of Ukraine, the EU imposed sanctions against individual oligarchs who own Russian fertilizer and potash companies. It also restricts the movement of fertilizers across the EU. Canada imposed a 35% tariff on Russian fertilizers in March 2022. Meanwhile, Russia has banned the export of ammonium nitrate fertilizers until May 2022. The US, on the other hand, is trying to prevent and increase fertilizer shortages. money does not sanction Russian fertilizers. In July 2022, the US Treasury Department issued a fact sheet to clarify that the sale or import of Russian fertilizers into the US is exempt from sanctions. With growing concerns about global food security, the EU eased its sanctions in December 2022 and allowed every EU member to sell assets to Russian fertilizer oligarchs to support food and fertilizer exports. Meanwhile, Russia has set fertilizer export quotas until May 2023 to maintain sufficient supplies for its farms. Until January 2023, Russia paid a 23.5% tax on fertilizer exports above $450 per tonne.
In spring 2022, prices are increasing for five fertilizers, but the increase in MOP is more pronounced. MOP price exported by Russia and Belarus was 53% higher in April 2022 compared to January 2022, higher than other fertilizers. In the same 3 months, rock phosphate prices rose by 38 percent, DAP by 36 percent and urea by 9 percent. Prices from TSP have increased by 27 percent, although countries other than Russia export this type of fertilizer.
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It imposed imports and other supply adjustments, while sanctions against Russia and Belarus hampered fertilizer trade. According to the Center for International Food Policy Research, large imports of fertilizer are being brought in from other sources, such as Brazil, to manage the shortage. Other suppliers, such as Canada and Morocco, have increased potash or phosphate production capacity due to increased tailings demand. In addition, natural gas prices for fertilizer production have fallen in Europe, allowing fertilizer production to increase.
By March 2023, fertilizer export prices had returned to pre-attack levels. MOP and urea prices are back to 2021 levels, down 62% and 66% respectively from April 2022 peaks. DAP and TSP prices are down more than 36% from April 2022. Simply put, the price of phosphate of rock continues to grow.
Seeds are a major input in food production, especially for many crops, so higher prices can affect food supplies. If a farmer reduces his use of fertilizers because of higher prices, his yield may decrease. The chart below shows the relationship between fertilizer use and crop yield based on data from the Food and Agriculture Organization of the United Nations. The color of the icons corresponds to the income categories for the countries defined by the World Bank. In general, grain yield is higher on mixed hectares. Farmers in low- and middle-income countries use less fertilizer, so using less can reduce crop yields.
Russia’s aggression against Ukraine pushed up fertilizer prices, and grain prices also rose, reaching their highest level in May 2022. The easing of export restrictions and sanctions and the opening of transit through the Black Sea contributed to the recovery of grain markets. In 2022, wheat reserves will decrease. Black Sea exports find alternative supply from Australia, the EU and Canada. Although grain prices have fallen, in March 2023 they are 20 percent higher than 2 years ago.
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Global Food Security Assessment 2022–32 by Jacob Abrehe Zereyesus, Lila Cardell, Constanza Valdes, Kayode Ajewole, Wendy Zeng, Jason Beckman, Maros Ivanic, Reem N. Hashad, Jeremy Jelliffe, and Jennifer Kee.
One Year on from the Russia-Ukraine War: Implications for Fertilizer Production, Prices and Trade Flows, Hebebrand, C. and Glauber, J., International Food Policy Research Institute, 09 March 2023
The Impact and Implications of Tariff Increases on Global Fertilizer Markets by Kitley, J. and Nti, F., US Department of Agriculture, Foreign Agricultural Service, June 30, 2022 To view ISW’s interactive map of Russia’s invasion of Ukraine, click here, click on the ground. This map is updated daily with static maps included in the report.
Click here to access ISW’s archive of interactive timelines of the Russian invasion of Ukraine. These maps complement the static terrain control map that ISW produces every day, showing the dynamic front line. ISW will update this map document every month.
Map Explainer: Key Facts About Ukraine
Note: The data cut-off for this product is May 13 at 2:30 p.m. ISW’s May 14 assessment of Russia’s aggressive campaign will include the following:
Ukrainian forces continued offensive operations on at least three fronts and made limited regional gains on 13 May. Ukraine’s Deputy Defense Minister Hanna Malyar reported that Ukrainian forces advanced 250 meters northeast of Bagmut and 200 meters south of Bagmut. [1] Malyar also reported that Ukrainian forces advanced 500–1,000 m around the administrative border between Zaporizhia and Donetsk regions in the past 24 hours, liberating about three kilometers of territory from the region. [2] Ukrainian General Staff spokesman Andriy Kovalev reported that the Ukrainian army had liberated more than 100 square kilometers of territory since the start of the offensive. [3] Wagner businessman Yevgeny Prigozhin said on 13 May that he estimated that Ukrainian forces had liberated more than 100 square kilometers. [4] Russian sources reported that during the night of 12–13 June, Ukrainian forces continued ground attacks southwest of Orihiv and south of Khulaipol in southern Zaporizhia province. [5] Russian sources reported that the frequency of Ukrainian operations in the Orihiv region has decreased in recent days. [6] On June 13, Major Vladyslav Dudar, a representative of the Department of Environmental Protection and Mines of the Ministry of Defense of Ukraine, reported that Russian forces are systematically destroying small dams in southern Ukraine to prevent actions against Ukraine. [7]
Russian President Vladimir Putin met with 18 prominent Russian bloggers and war correspondents on June 13 to discuss the progress of Russia’s invasion of Ukraine. [8] Putin lobby meeting
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