Bureau of investigation on people's livelihood | Rice caused by rising fertilizer prices or loss of global grain production is enough to support 500 million people

Zhongxin Finance and Economics, May 9 (Reporter Xie Yiguan)-"one cent of fertilizer, one part of grain; very fat, grain warehouse is full. "

Chemical fertilizer, a chemical closely related to food production, is becoming an invisible hand that threatens global food security with its rising prices.

Under the influence of multiple factors, international fertilizer prices have soared.

Recently, the world's largest producer of nitrogenous fertilizer$CF Industrial Holdings (CF.US) $Publish the financial reportNet income attributable to common shareholders in the first quarter was $883 million, up 485 per cent from a year earlier.

According to the financial report, in the first quarter of 2022,The average selling price of CF industrial holding products is $620 a tonne, up 170 per cent from $230a tonne in the same period last year.

"the higher average selling prices in all market segments are mainly due to strong global demand, rising global energy costs and geopolitical events leading to lower global operating rates, reduced supply and a tighter balance between global nitrogen supply and demand. "the company explained.

In fact, since 2021, the international fertilizer market has seen a sharp rise due to rising prices of raw materials such as natural gas and epidemic disruptions to the global supply chain.

From India to Vietnam and the Philippines, the price of nutrients crucial to boosting food production has tripled or tripled in 2021 alone, Bloomberg reported.

After the conflict between Russia and Ukraine, the sanctions imposed by Western countries on Russia and the anti-sanctions measures taken by Russia have caused another stir in the already restless international fertilizer prices.

On March 10, local time, the Russian Ministry of Industry said that the country had decided to ban the export of chemical fertilizer to "unfriendly" countries. On March 12, local time, Ukrainian Minister of Food and Agricultural Policy Roman Leshchenko said that the Ukrainian government has decided to temporarily ban the export of all types of chemical fertilizers.

Russia is the world's largest exporter of nitrogen fertilizer, the second largest supplier of potash fertilizer and the third largest exporter of phosphate fertilizer in 2021, according to officials of the United Nations Food and Agriculture Organization.

Since the crisis in Ukraine, global nitrogen fertilizer prices have soared 40 per cent, 50 per cent, and phosphate and potash prices have risen by about 30 per cent. Russia's Interfax news agency recently reported.

High prices of chemical fertilizer have an impact on global food security

With supply tightening and prices soaring in the international fertilizer market, farmers using less fertilizer may mean less harvest. The International Rice Research Institute predicts that rice production could fall by 10 percent next season, equivalent to a loss of 36 million tons of rice, which could feed half a billion people, according to Bloomberg.

Humnath Bhandari, senior agricultural economist at the International Rice Research Institute, said this was a "very conservative estimate", adding that if the crisis in Ukraine continued, the impact could be more serious.

"there will be no real solution to the problem of global food security without bringing Ukraine's agricultural manufacturing and Russian and Belarusian food and fertilizer manufacturing back to the world market. Un Secretary General Antonio Guterres said recently.

The supply is tightening, the demand is increasing, and the domestic chemical fertilizer has also increased significantly.

International fertilizer prices are in short supply, soaring all the way, becoming the "sword of Damocles" hanging in the global grain market. What about the domestic fertilizer market?

Zhongxin Financial and Economic reporter combed through the data of the National Bureau of Statistics and found that the price of urea (small particles) in national circulation has risen from 2210.9 yuan per ton in late April 2021 to 2934.3 yuan per ton in late April 2022, up 32.7% from the same period last year. The price of compound fertilizer (potassium sulfate compound fertilizer with 45% nitrogen, phosphorus and potassium content) rose from 2487.5 yuan per ton in late April 2021 to 3861.4 yuan per ton in late April 2022, up 55.2 per cent from the same period last year.

The rise in fertilizer prices has also raised the cost of growing grain for farmers.

"Last summer, it was 130 yuan a bag of compound fertilizer, but it became 170 yuan in the autumn. This year, the price is still high. In addition, urea has also gone up a lot. Lao Zheng, a farmer in Zhumadian, Henan Province, told Zhongxin Financial reporter.

In Yongji, Jilin, a village party branch secretary said fertiliser prices had risen by more than 40% compared with the same period last year.

The supply of chemical fertilizer in the domestic market has been relatively stable, why did it rise significantly this time?

"on the one hand, some places have previously promoted a reduction in chemical fertilizer production, resulting in a reduction in domestic fertilizer production. On the other hand, with the sharp rise in international fertilizer prices last year, the export volume of chemical fertilizer in China has increased, resulting in a tight supply of chemical fertilizer in the domestic market. Li Guoxiang, a researcher at the Institute of Rural Development of the Chinese Academy of Social Sciences, told reporters.

"in addition, with the rise in grain prices, farmers are more active in planting, increasing the use of chemical fertilizer, and the price of chemical fertilizer on the market goes up. "said Li Guoxiang.

According to Lao Zheng, "the purchase price of wheat sold last month was 1.5 yuan per jin, and last year's purchase price was still 1.2 yuan per jin." "

In addition, the increase in import prices of chemical fertilizer raw materials is also a factor. Take potash fertilizer as an example, at present, domestic potassium chloride is more dependent on imports. Chinese customs data show that domestic potassium chloride imports are 7.57 million tons in 2021, accounting for 83.28% of the total 9.09 million tons of fertilizer imports in the same period.

Restricted by the tight supply of domestic and international chemical fertilizer market, China's fertilizer import and export decreased significantly in the first quarter of this year. However, under the rising prices, the amount of fertilizer imports and exports, especially the amount of imports, increased significantly, and the total amount of imports from January to March increased by 39.7% compared with the same period last year.

The country will do it! Guarantee the supply and stabilize the price and lighten the burden on farmers

The high price of chemical fertilizer has brought no small burden to farmers. In the face of rising fertilizer prices, the relevant departments have made intensive efforts.

Following an interview with the National Development and Reform Commission in the second half of 2021 to remind key chemical fertilizer enterprises not to hoard and organize potash reserves through low-price bidding, this year's "Government work report" has proposed to ensure the supply and price stability of agricultural materials such as chemical fertilizers.

In March, the central government allocated 20 billion yuan to grant one-off subsidies to actual grain farmers to alleviate the impact of rising agricultural prices on growing grain. In addition, 11 departments, including the National Development and Reform Commission, issued notices to deploy spring ploughing chemical fertilizers for price stabilization.

"the increase in grain purchase prices, coupled with state subsidies, will help ease the pressure caused by rising fertilizer prices. Li Guoxiang said.