Grain Shortage & Soaring Fertilizer Prices put Global Food Security at Risk

New Delhi, India: The Grain prices rose modestly in the first half of the first quarter. According to the data released by UN FAO, several agencies previously predicted the situation as the food pricing index was hovering over an all-time high during the end of the fourth quarter of 2021. At the same time, the absence of Chinese supplies of Phosphate based fertilizers has boosted the demand tremendously in the international market, coupled with the increased VAT rates on the export of fertilizers from Russia. In addition, the seasonal demand hype from the agricultural sector supported the price hike in fertilizers across China.

The conflict in the eastern European region has created a food security crisis and higher energy prices as the Russian force started its special military operations over Ukraine. The nation is acknowledged as the world's largest exporter of essential grain, harvesting 11% of the world's wheat and 17% of its corn.

Despite the Russian special military operations, the harvest continued but could not leave Ukraine. Now, large quantities of grains are sitting idle, and Ukraine's storage capacity is reaching its limit, exacerbating the food crisis in the world's most vulnerable regions.

According to the UN, approximately 25 million tonnes of grains could be exported but cannot be transported due to the blockade of Black-sea ports and infrastructural damages. According to the latest developments, the UN FAO food pricing index was assessed at 158.5 points, witnessing an increment of 29.8% on a year-on-year basis.

On the other hand, Russia is among the largest supplier of Fertilizers to overseas markets and Europe. According to the analysis of the Brazilian market, approximately one-third of the market supplies for fertilizers were dependent on Russia and Belarus. Recently, the CF Industrial holdings, the world's largest Nitrogen-based fertilizer producer, reported that the net income observed an increase of 485% on a year-on-year basis as the average selling prices remained higher in all regions.

As per ChemAnalyst, since the conflict broke out in eastern Europe, the pricing intelligence showcased that the prices for global Nitrogen have witnessed gains of 40-50%, and the offers for Phosphates and Potash surged by 30%. A senior agricultural economist stated that the global food security could not be solved without bringing agricultural manufacturing in Ukraine and food and fertilizers production back in Russia and Belarus back to the world market.