World economies must improve access by countries, particularly developing nations, to fertilizers to mitigate a possible global food crisis, the World Trade Organization (WTO) and the United Nations (UN) said.
In a joint study, the two multilateral bodies urged G20 governments to deploy “all” available policy measures to address the current global fertilizer crisis, such as keeping the trade of vital planting input open to everyone.
The recommendation of the study comes at the heels of continuous elevated global fertilizer prices that have been hounding world food production since Russia invaded Ukraine.
“The study recommends, in particular, that G20 governments keep food, feed and fertilizer markets open and minimize disruptions to trade in fertilizers, including refraining from export restrictions inconsistent with WTO rules,” the WTO said in a recent statement.
“It stresses the need to ensure access to fertilizers for the most vulnerable countries, including through mobilizing international financial support and leveraging risk management tools, such as fertilizer contract swaps to hedge against extreme price volatility.”
The joint study projected that global fertilizer shortage would “likely” persist next year, thereby threatening world agricultural production and food security, particularly in Africa, which is “heavily” dependent on imported farm inputs.
The WTO and FAO urged G20 governments to refrain from imposing new export restrictions and if possible withdraw any remaining export restrictions on fertilizers.
G20 governments were also asked to reduce their applied tariffs, for the most vulnerable countries, to “relieve critical domestic fertilizer shortages” and improve both access and affordability to the planting input.
The joint study revealed that from January 2021 until October 15 of this year, 19 WTO member-states implemented 41 fertilizer-related measures, nearly three-fourths were in the form of trade policy measures.
“In response to rising global demand for fertilizers and rising domestic prices, several key suppliers have introduced export restrictions, placing further upward pressure on international fertilizer prices, especially since late 2021,” it said.
“Most export restriction measures implemented during the reference period took the form of bans, duties, taxes and quotas. By contrast, export licensing and export inspection or certification requirements were not widely used, thus playing a relatively minor role in constraining fertilizer exports.”
The WTO and FAO said the Russia-Ukraine war dealt a “severe blow” to global economic outlook as it hampered post-pandemic recovery and aggravated persisting supply chain problems. Russia and Ukraine are key players in the fertilizer market and any reductions in their exports would result in higher food prices, they added.
“With prices of fertilizers and other energy intensive products being exacerbated by the conflict, overall input prices are experiencing a considerable boost,” they said.
“The recent surge in agricultural input prices is raising concerns about rising costs of food production, since changes in production costs readily translate into changes in food prices.”
The WTO and FAO said that the rate of increase in fertilizer prices is outpacing the increase in prices received by farmers, thereby “squeezing producer margins.”
“This could imply, in turn, a lower affordability and input use by farmers, leading to additional issues of food availability and compounding the food access problem,” they added.