Global food price pressures will continue

The global shortage of nitrogen fertilizers, used to increase crop yields, may affect the value of food next year.

World prices for nitrogen fertilizers are at their highest levels in more than a decade, specialists warn.

Sales of these types of nutrients for agricultural use amounted to 53,000 million last year. But this year alone, prices have risen by at least 80%, according to data from consultancy Argus Media.

Nitrogen-based fertilizers are obtained from natural gas, which has impacted the costs of their production as a result of the rise in the prices of this fuel.

Various factors contributed to the price hike. The costs of natural gas, a key input in nitrogen production, skyrocketed in Europe due to high demand and tight supplies, while in the US Hurricane Ida disrupted fertilizer production during August.

Farmers use nitrogen to increase the harvest of corn, canola, wheat and other foods, applying it before the planting season.

But at current prices, farmers have had to delay their purchases. These postponements could result in rush purchases next spring, likely leaving many other people without the product, Daren Coppock, executive director of the American Agricultural Retailers Association, told The Guardian.

According to one of the major nitrogen fertilizer producers, CF Industries, the strong global demand for the nutrient for crops may last until at least 2023.

World Foods at 10-Year Record Levels

In October, world food prices touched levels not seen since July 2011, according to information from the Food and Agriculture Organization of the United Nations (FAO).

The Food Price Index, which measures the monthly variation of the international prices of a group of basic products, had a rise of 31.3% in annual terms at the end of October.

Cereals average a 22.4% increase in one year; while dairy products have had an annual increase of 15.5%.

Challenges for farmers

Typically, MKC, a Kansas agricultural cooperative, sells fertilizers to farmers in exchange for an upfront payment with a future delivery date.

Against this background, MKC has reduced its prepaid sales as a precaution.

“You just don’t know what the price will be. It has put many retailers in a difficult situation, ”Troy Walker, director of retail fertilizers at MKC told Reuters.

Delaying the purchase of fertilizers until spring risks further supply chain congestion.

“There will be people who will wait and see,” Coppock said.

Some countries such as Russia, China and Turkey, which are the main producers of fertilizers worldwide, have decided to limit exports to cope with domestic increases in food prices.

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