Russian and Ukrainian wheat are not easily substituted. According to the United Nations, inventories are already tight in the United States and Canada, while Argentina is restricting exports and Australia has run out of shipping capacity. In the past year, the price of wheat has increased by 69%. Among the other major food exports of Russia and Ukraine, the price of corn increased by 36% and the price of barley increased by 82%.
The war also threatens another lasting shock to food markets: lack of fertilizer.
Matt Huie, a farmer near Corpus Christi, Texas, says skyrocketing prices have forced him to stop fertilizing the grazing fields that feed his hundreds of cows, assuring them they’ll thin out when subjected to stress. Kill meat. Now he worries that he will have to reduce the amount of fertilizer for the next corn crop, which will reduce its yield. “We have entered uncharted territory,” he said.
Russia is the world’s largest fertilizer exporter, providing about 15% of the world supply. This month, just as farmers around the world are getting ready to plant, Russia ask their fertilizer manufacturers to stop exporting. Sanctions have made such transactions difficult.
Sanctions have also hit Russia’s closest ally, Belarus, a top producer of potash-based fertilizers vital to many major crops including soybeans and corn. But even before the Ukraine war, Belarus’ fertilizer exports blocked because of sanctions for the arrest of a foreign dissident who was a passenger in a The Ryanair jet was forced to land in the country.
In another ominous signal to fertilizer customers, earlier this month European fertilizer producers said they had slow down or stop production because Energy prices soar. Many fertilizers are created using natural gas.
The world’s major fertilizers have now more than doubled or tripled in price over the past year.
Brazil, the world’s largest soybean producer, buys nearly half of its potash fertilizer from Russia and Belarus. It now has only three months of reserves left. The National Soybean Farmers Association has instructed its members to use less fertilizer, if any, this season. Brazil’s soybean production, already reduced by severe drought, is likely to be even smaller.
