Fertiliser prices highest in decade
Price rises of 50% in the past year will add significantly to farmers’ costs, and may prevent them from increasing production enough to reduce the record global agricultural commodity prices. High oil prices and strong demand are expected to underpin prices set by fertiliser manufacturers around the world.
Farmers in the EU enjoyed very low prices for nitrogenous fertilisers such as urea in 2006, but prices have shot to record high levels now, having risen about 50% in a year.
Phosphate fertiliser prices have generally increased, at the wholesale level, by about 67% in the past 12 months.
The trend adds to global food price worries. “If prices continue to rise, I would not be surprised if we began to see food riots,” said Jacques Diouf, director-general of the United Nation’s Food and Agriculture Organisation, after more global food price increases emerged recently at wholesale level.
He said many countries will have to take hard decisions because of the impact of food prices. Already, Russia has introduced controls on some basic foods, Morocco recently cut wheat import tariffs, and Egypt has increased food subsidies. Food price inflation in developing countries has risen in the past year to about 11%, compared to non-food inflation of about 7%.
Meanwhile, the world’s lowest wheat stocks since 1979 may fall further due to cuts in Australian wheat yield forecasts. Now, only 12.1m tonnes is expected, down from 15.5m tonnes expected last month, and from 22.5m tonnes projected in June.
The effect of Australia’s record drought will add the sharp rise in wheat prices this year, as consumers in China and India, demand more meat and poultry, in turn forcing up cereal demand for livestock.
Difficulties for grain importing countries are exacerbated by extraordinary rises in ocean freight rates, which are setting new records.
