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Concern over the decrease in fertilizer exports due to the war in Ukraine

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Russia and Belarus export about 25% of global fertilizer production

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Especially in poor countries, the global oligopoly of Russia, Belarus and China in the production and marketing of fertilizers has begun to worry governments around the world. [Reuters]

The dependence of global agricultural production on the fertilizers of just three countries is again a cause for concern as it once again raises the risk of a food crisis due to declining production. The world gets its fertilizer from Russia, China and Belarus, and a year after the Russian invasion of Ukraine, the United Nations is warning that the turmoil caused by this devastating war on fertilizer markets is the number one security risk and food sufficiency in 2023. The shock to this global fertilizer industry, worth a total of $250 billion, underlined the key role of Russia and Belarus, which are the countries that export about 25% of the world's fertilizer production.

After all, according to the IMF, fertilizers are of critical importance in order to ensure agricultural production, now that the shock of the war between Russia and Ukraine threatens 48 countries in Africa, Asia and Latin America with a food crisis. In addition to the risks to the survival of the populations, especially the poorest, the global oligopoly of these three countries in the production and marketing of fertilizers has begun to worry governments around the world. The issue has thus occupied a prominent position on the political agenda of the governments of many countries, while at the same time fueling the confrontations as to who is responsible for the escalation of the crisis that has led to these shortages. The three categories of fertilizers produced by Russia – potash, phosphate salt and nitrogen – are not subject to the sanctions because of their criticality to global agricultural production. However, their exports remain limited due to a combination of barriers they face in ports, loading, bank management of their trade and insurance.

Speaking to Bloomberg, the Russian tycoon and owner of the fertilizer industry EuroChem Group, argued that the sanctions imposed by the E.U. in Russia they have blocked trade to the extent that by February 24th, the one-year anniversary of the Russian invasion of Ukraine, total fertilizer exports will have decreased by 13 million tons. Global market shocks sent prices skyrocketing last summer, forcing whatever countries or industries could afford the cost to build up stocks. In the meantime, prices have partially de-escalated, but remain higher than pre-pandemic levels. Fertilizer supplies are, after all, very limited in the poorest areas. And the situation worsens after the sanctions imposed on Belarus, a giant in the production of potash and above all after the decision of China, the most important producer of phosphate and nitrogen, to impose restrictions on exports of both categories of fertilizers in order to ensure sufficiency in the domestic market . Market players are discounting that these restrictions will not be lifted before mid-2023 at best. The effects and geopolitical tremors are being felt far and wide from Ukraine to even Canada, which is the world's number one potash producer, with Russia and Belarus in second and third place respectively. The Brazilian Minister of Agriculture went to Canada immediately after the war began to secure supplies of fertilizer.

Source: www.kathimerini.com.cy

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