Nachricht
10.11.2022 | permalink
Report denounces farming’s costly dependency on chemical fertilisers
![A worker fertilizing on oil palm plantation in Papua, Indonesia (Photo: Agus Andrianto / CIFOR, bit.ly/CIFOR_Fert, bit.ly/2_CC_BY-NC-ND_2-0) Ferti](typo3temp/_processed_/sosnews_w220_kfnh9LbhM777cVXekMa3rHVxhbQmEU7VUkXTN7Ux.jpg)
As farmers and governments are struggling to cope with increased fertiliser prices, the world’s largest agribusiness giants are making record profits, a new report reveals. According to “The Fertiliser Trap”, published by GRAIN and the Institute for Agriculture and Trade Policy (IATP) on November 8th, G20 nations paid almost twice as much for key fertiliser imports in 2021 compared to 2020 and are on course to spend three times as much this year. This entails an additional cost of around US$ 22 billion in 2021 and 2022, while the world’s biggest fertiliser companies are expected to make almost US$84 billion profit over the same period. “This year, the bill for these energy-intensive products has hit new heights. With the world in the midst of an energy and climate crisis, prices for chemical fertilisers are at record levels,” the report authors write. “Fertiliser corporations are using their market power to capture mega profits, while farmers and governments are scrambling to try and cope with the added costs, especially in the global South.” They warn that high fertiliser prices are putting food production at severe risk in many places. The authors conclude that the world can no longer afford the food system’s addiction to chemical fertilisers. “The costs are too high, both in terms of the financial burden for farmers and public budgets, and the severe environmental and health impacts. Governments urgently need redirect public funds and policies away from industrial agriculture and towards agroecological farming.”
The report examines the wholesale costs of the three fertilisers imported in the greatest quantities to the G20 and a sample of developing countries for which data was publicly available, using data collected by Bloomberg Green Markets. One limitation was that for major fertiliser producers, imports only represent a small proportion of their total application of chemical fertilisers. However, domestic production and cost data were not easily available. This means that the findings of the report “only tell part of the story” – the extra costs in 2021 and 2022 to governments and farmers are likely to be significantly underestimated. The report finds that the cost of chemical fertilisers in both the global North and South has skyrocketed over the past two years, putting severe economic strain on farmers’ and public budgets. It is estimated that the G20 members spent almost twice (189%) as much for key fertiliser imports in 2021 compared to 2020 and in 2022, they will spend three times (288%) as much. This means that over this period, the G20 paid at least US$ 21.8 billion extra for the three chemical fertilisers they import in the greatest quantities. For example, the UK paid an extra US$ 144 million for fertiliser imports in the two years analysed, and Brazil paid an extra US$ 3.5 billion. For example, in January 2020 Canada was paying US$ 225 for a tonne of urea from the Baltic, whereas by January 2022, it had to pay US$ 814 per tonne. The nine developing countries examined together spent 186% more in 2021 and 295% more in 2022 for the same sample of fertilisers. This produces a total extra bill of US$ 2.9 billion. Among these countries is Pakistan, which paid an extra US$ 874 million. “The era of cheap fertilizers is over, and the costs have become too much to bear,” the authors write.
But why are costs rising? According to “The Fertiliser Trap”, the initial price increases in 2021 were driven by the rising cost of natural gas – a key raw ingredient for nitrogen fertilisers. After falling slightly in early 2022, there was another sharp increase due to the war in Ukraine which constrained the supply of both gas and fertiliser itself. Russia supplies 45% of the ammonia nitrate market. Russia and Ukraine are both significant exporters of phosphorus fertilisers. Prices climbed again in summer when it became clear the war would not end quickly and concerns over gas shortages in Europe returned. The authors add that some chemical fertilisers are not made from gas but from mineral deposits, such as potash and phosphate. However, the mining and production of fertilisers using these minerals is highly energy-intensive and thus still affected by gas prices. 75% of the world’s potash production comes from China, Canada, Russia, and Belarus.
But another factor is also fuelling fertiliser prices: corporate profits. The US$ 200 billion global fertiliser market is controlled by just a handful of companies. Only four of these companies control 33% of the entire nitrogen fertiliser production. In the US, Mosaic is estimated to control over 90% of the domestic phosphate fertiliser market. Given their market power, these companies have so far been able to pass on the increased costs of their raw ingredients and production processes to maintain or even increase their profit margins. According to company filings, the combined profits of nine of the world’s biggest fertiliser companies (Nutrien, Yara, Mosaic, ICL Group, CF Industries, PhosAgro, OCI, K+S, OCP) were just under US$ 13 billion in 2020. In contrast, if their reported profit levels in the first six months of 2022 are maintained, then over the whole year they will earn more than US$ 57 billion in profits, up 440% from two years ago. The profits of The Big 9 in 2021 and 2022 could reach a total of US$ 84 billion.
What can be done? The response so far from many governments has been to look for ways to increase chemical fertiliser production. Not surprisingly, this is also the solution that the world’s largest fertiliser companies are promoting. But GRAIN and IATP say that increased production will not resolve this crisis. First, the huge profits that fertiliser companies are making should be dealt with urgently. Some ideas that have been suggested include the imposition of windfall taxes and investigations into pricing. Second, governments should take urgent action to support a significant reduction in the consumption of chemical fertilisers. In countries where industrial agriculture is dominant, one of the most immediate and impactful steps that can be taken is public support for farmers to implement more efficient fertiliser use. In many countries, a large amount of fertiliser is over-applied and wasted. The excess evaporates or is washed away, polluting air, soils and water. In Germany, a study found that only 61% of fertiliser is reaching wheat crops, meaning 39% is wasted. In Canada only 59% of fertiliser reaches crops and in Australia 62%. Other measures include a change in subsidies in order to support a managed transition towards farming practices that significantly reduce or eliminate the use of chemical fertilisers. Public or private philanthropic programmes that support the introduction of fertilisers into farming systems which are not already dependent on their use should be stopped. “In many places, farmers are already demonstrating that they can transition away from the use of chemical fertilisers as part of a broader transition to agroecology, without sacrificing their yields”, the report finds. “Agroecology incorporates traditional knowledge with science, empowers farmers as actors in their markets, focuses on delivering varied and healthy food, and works with biodiversity and nature. With agroecology, instead of chemical fertilisers, farmers restore nutrients and fertility to soils through the use of manure or through the cultivation of plants that absorb nitrogen from the atmosphere, such as legumes,” the authors conclude. (ab)