Expect another rise in food prices as Russia-Ukraine war continues
Food prices that are already at their highest point in more than a decade are set to push even higher amid a global shortage of fertilizer that has worsened since Russia invaded Ukraine.
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Fertilizer prices were already on a steep rise due to supply bottlenecks tied to the COVID-19 pandemic, as well as the rising cost of natural gas to produce it, Bloomberg reported. The invasion of Ukraine by Russia — a key supplier of fertilizer and other crop nutrients — will only add to the problem.
As an example, Bloomberg pointed to prices for urea, a common nitrogen fertilizer. In New Orleans, the weekly price of urea surged 29% after Russia invaded Ukraine — a record gain for the 45-year Green Markets index.
The result is that farmers will face higher costs to produce food, and consumers will see higher prices in grocery aisles and at restaurants.
“We could be tightening fertilizer supplies ahead of the North American growing season, and that would impact a whole year’s global production,” Arlan Suderman, chief commodities economist at financial-services network StoneX, told Bloomberg.
This is not a new problem. In December, farmers asked the U.S. Department of Justice to investigate whether recent fertilizer price spikes were the result of market manipulation by fertilizer companies, Reuters reported. The request was made in a letter sent to the agency by the Family Farm Action Alliance, an organization that includes more than 6,000 farmers and rural members.
The letter alleged that fertilizer companies were setting prices based not on basic supply and demand, “but rather on the price the farmer is paid for their commodity crops.” It was sent after global fertilizer prices reached record highs in 2021.
One concern is that consolidation in the U.S. fertilizer sector has resulted in two companies — Nutrien Ltd. and Mosaic Co. — controlling 93% of the North American potash market, according to a 2020 report by the Federal Trade Commission.
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Government officials have taken note. Iowa’s attorney general commissioned a market study on the “unprecedented” increase in fertilizer prices, Bloomberg noted, while U.S. Department of Agriculture Secretary Tom Vilsack has warned fertilizer companies and other farm suppliers not to take “unfair advantage” of the Ukraine conflict by engaging in price gouging.
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This article originally appeared on GOBankingRates.com: Food Prices To Rise Again As Russia Conflict Further Reduces Fertilizer Supplies
