eBusiness Weekly
The price of fertilisers is likely to increase ahead of the winter cropping season, on the back of volatile natural gas prices and other raw materials, industry players have warned.
Natural gas is a key input for fertiliser production – especially ammonium nitrate, which is the most commonly used nitrogen fertiliser. While price of fertiliser have been rising, reaching a record high on the back of the war in Ukraine and its repercussions on trade flows, industry players fear the cost of crop nutrients could further go up.
With Russia’s status as a primary exporter of ammonia, knock-on effects from sanctions imposed on the country have seen the fertiliser supply chain buckle under the weight of increased strain, creating concerns over food security, reports say.
“Natural gas prices have been increasing and this will also result in price increase in ammonium nitrate prices,” Bothwell Nyajeka, the chief executive of Sable Chemicals, Zimbabwe’s sole producer of AN told Business Weekly in an interview.
The cost importing ammonia gas into Zimbabwe is US$1 500, about 150 percent ahead of last year’s price.
Since the beginning of 2020, nitrogen fertiliser prices have increased fourfold, while phosphate and potash prices over threefold, according to reports, reaching levels higher than previous record in 2008 during global food crisis.
“Zimbabwe is a major importer of fertilizer and the impact will be felt,” said an executive with a local cotton company, which supports some smallholder farmers.
Fertiliser shortages and high prices are being felt across the globe, according to S&P. It said as a result of higher prices of natural gas prices in Europe, various fertilizer companies were shut, triggering supply concerns around the world.
Citing Yara Fertilizers, it said the record high natural gas prices in Europe are affecting ammonia production margins, resulting in the company cutting production.
In the US, input costs for farmers have gone up with fertilizer prices soaring. The US is the largest producer of corn globally and corn is a highly-fertiliser intensive crop, S&P said.
US corn farmers have talked about moving to different crops such as soybeans or reducing their usage of fertilisers in the upcoming planting season if prices continued firming.
During gasworld’s Europe CO2 Summit 2022, Jennifer Willis-Jones from Fertiliser Week explained just how the war in Ukraine has crippled ammonia trade flows from the region.
“There are two ports, the Baltic Sea Port and the Black Sea port,” she said.
“The Black Sea port is using the port in Ukraine; this is extremely important for ammonia.”
Following closure of the pipeline, gas flow supply reduced, and demand increased, causing a spike in prices. “Ammonia prices are set to skyrocket further.
“There’s a lot of upwards pressure on ammonia prices at the moment,” added Willis-Jones—Business Weekly/Wires.
