A study looking into current volatility in the fertilizers market and its impact on agricultural production was issued today (14 November) by the WTO and the UN Food and Agriculture Organization (FAO). Calling for urgent action to address the fertilizer crisis, the study outlines policy recommendations for G20 governments, highlighting the importance of keeping the fertilizer market open to meet global demand and to avoid a food availability crisis.
Factors such as the war in Ukraine, high inflation, supply chain disruptions and the global economic downturn have led to soaring prices for fertilizers and agricultural products, notes the study titled “Global fertilizer markets and policies: a joint FAO/WTO mapping exercise”, resulting in limited availability in many countries. The study forecasts that shortages in fertilizers will likely persist into 2023, threatening agricultural production and food security in Africa in particular, where farmers are heavily dependent on imported agricultural inputs.
The study also looks at the measures adopted by WTO members in relation to fertilizers between 1 January 2021 and 15 October 2022 and their impact on the global fertilizers market. The study shows 19 WTO members introduced 41 fertilizer-related measures during this period, with 75% of them in the form of trade policy measures. Export-restrictive measures accounted for as much as 41% of all fertilizer-related measures while increased tariffs and domestic subsidies have placed further upward pressure on international fertilizer prices, especially since late 2021, the study finds.
The study urges G20 governments to deploy all policy measures available to deal with the fertilizer crisis, underlining the need to make “every effort” to keep trade in fertilizers open so that supplies reach the countries in most need of them.
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. 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. In addition, it underlines the need to increase market and policy transparency, through G20 members’ timely and complete notifications of trade measures to the WTO and enhanced data and policy monitoring at the FAO and through the G20 Agriculture Market Information System (AMIS).
Finally, the study recommends improving soil fertility and accelerating innovation for more efficient use of fertilizers, with greater use of precision farming practices, reducing fertilizer subsidies and promoting sustainable and resilient food systems.
The full study can be accessed here
