Fertilizer prices, a new threat

  • 10/06/2008

  • Hindu (New Delhi)

WASHINGTON/WINNIPEG: It powered the Green Revolution and helped save millions from starvation, but now one of the most important tools on the farm is being priced out of reach for many of the world's growers. With food prices soaring and stocks thinning, the world is in need of bumper harvests but once one of most bountiful of commodities, fertilizer, is becoming scarce and expensive. It's estimated that one third of the protein consumed by humans is a result of fertilizer. So high prices and spot shortages are yet another stress on the world's ailing food system. "You can't really expect a bigger harvest if you will not use fertilizer, but the cost is killing us," rice farmer Jaime Tadeo in the Philippines told Reuters, adding that a bag of fertilizer now sells for nearly 1,800 pesos, or $43, up from less than 1,000 pesos a year ago. Fertilizers are like vitamins for soil and consists of three main types, nitrogen, potash and phosphate. Because some fertilizers such as nitrogen require energy to produce they track energy prices. But other kinds are just in high demand, though experts say the shortages are not due to a lack of supply. Last month China agreed to pay more than triple what they did a year ago to get hold of tight supplies of potash, sending the shares of global fertilizer makers to record levels. China, the world's biggest import market for the nutrient, will pay $650 to $670 a tonne for the product, analysts estimated. "With the intense pressure on global food production and continued growth in potash demand, this is the reality for our industry for the foreseeable future," said Bill Doyle, chief executive of Canada's Potash Corp, the world's top producer. The rising price is a burden on rich and poor farmers alike as they represent a big investment upfront, despite high world prices for crops. If all goes well, a farmer can earn $3 for every $1 invested in fertilizer. "We're all hoping Mother Nature cooperates and we can fill the bins, because ...we've got a lot on the line," said Robert McLean, a farmer in Canada's grain belt as he hauled a tractor-trailer load of canola harvested last fall. Phosphate prices are up 50 percent over last year at C$570 per tonne when Mr. McLean, who grows wheat, barley and canola in south-central Manitoba, booked supplies in January. With enough rain and heat, fertilizer will help farmers reap historically high grain prices. But poor yields would leave them struggling to pay for next year's supplies. Fertilizers were seen crucial in the Green Revolution of the past few decades where farmers, especially in poor countries, were able to dramatically increase crop yields.