A 10-year record rise in fertilizer prices was cited as the new reason for the rise in food prices, Bloomberg reports.
The price of three major groups of fertilizers — potash, phosphate, and nitrogen — is at a 10-year-high, seriously affecting global food inflation.
Corn will be hit the hardest by higher prices. About 20 percent of its growing costs come from fertilizer. A poor corn crop will result in higher feed costs, ultimately leading to higher meat prices. Juices and carbonated beverages could also rise in price because corn is their main ingredient. Corn crops are expected to decline to 36.8 million acres in 2022 from the current 37.8 million.
One factor in the rise in fertilizer prices is adverse weather conditions. Constant storms at the end of summer 2021 on the Gulf Coast in the U.S. prevented the import and export of products. It also temporarily shut down plants in the region, including the world’s largest nitrogen complex owned by CF Industries Holdings. At the same time, the company was forced to close two plants in Great Britain because of gas prices. Yara International ASA, one of the world’s largest fertilizer suppliers, also said high natural gas prices will force it to cut about 40 percent of its ammonia production in Europe.
On top of that, transportation is getting more expensive. According to one executive at Quest Products, a company that helps bring new products to market, including pesticides and fertilizers, freight is about 15 percent of the purchase price of the product. Political measures are also affecting the price increases.
Global food prices have reached a 60-year-high. In August 2021, they rose 33 percent. The reasons are record droughts, labor shortages, and problems in the supply chain.