Rising Fertiliser Costs May Prolong Global Food Tensions, Says FAO

*Food imports to hit $1.8trn in 2022
Ndubuisi Francis in Abuja

Spiraling costs of farm input like fertiliser could deter growers from expanding production and worsen food security in poorer countries facing record import bills, the United Nations Food and Agricultural Organisation (FAO) has said.

In its latest Food Outlook, the UN agency pointed out that Nigeria, other countries in Sub-Saharan Africa and other nations that buy more food than they export were likely to face an increase in costs, for which they would get lower amounts of essential foodstuffs.

Fertiliser prices have been rising in the last six months, with Nigerian farmers lamenting.
The commodity which was sold between N11,000 and N16,000 in January this year, now costs between N24,000 and N30,000, depending on type and location.

A recent report by a management consulting firm, Boston Consulting Group, had revealed that Nigeria and 44 countries suffered the direct and indirect impact of Russia-Ukraine war-induced food crisis.
The Boston report listed heavy reliance on food imports, high import bills, high inflation, high debt burden, climate risk and civil unrest as additional factors worsening the food crisis.

However, the latest FAO report revealed that the ever-higher fixed costs for farmers of so-called “agricultural input” such as fertiliser and fuel were likely to be responsible for this year’s bigger-than-ever global food import bill.

It stated that the world’s most vulnerable now pay even more for less food, adding that countries were expected to spend a staggering $1.8 trillion importing food they need this year.
“This would be a new world record but worryingly, it’s going to buy them less food, not more,” the FAO report added.

The agency explained that all but $2 billion of the additional $51 billion that was going to be spent worldwide on edible imports this year was due to higher prices.

The multilateral organisation explained that in view of the soaring input prices, concerns about the weather and increased market uncertainties stemming from the war in Ukraine, its latest forecasts pointed to a likely tightening of food markets and food import bills reaching a new record high.

It stressed that an index of input costs for farmers was running at a record high and had climbed more steeply than food prices in the past year, suggesting low prices in real terms for many farmers.

“The findings do not augur well for a market-led supply response that could conceivably rein in further increases in food prices for the 2022/23 season and possibly the next,” FAO said.

Mounting input costs linked to high energy prices and supply disruption caused by Russia’s invasion of Ukraine, have coincided with record food prices this year as measured by FAO’s global food commodity index.

The FAO noted that many developing countries were expected to reduce volumes of imported food in response to rising prices, even as it projected that least-developed countries would cut volumes so sharply as to lower their overall import bill.

“These are alarming signs from a food security perspective, indicating that importers will find it difficult to finance rising international costs, potentially heralding an end of their resilience to higher prices,” it said.

The FAO stated that developing countries, as a whole, are reducing imports of cereals, oilseeds and meat, which reflects their incapacity to cover the increase in prices, it pointed out.

Among the most vulnerable nations, the FAO estimated that least developed countries would have little option but to spend five per cent less importing food this year.

Sub-Saharan African States and other nations that buy more food than they export are likely to face an increase in costs for which they would get lower amounts of essential foodstuffs.

“These are alarming signs from a food security perspective,” said the FAO, which also warned that, “importers will find it difficult to finance rising international costs,” and that these could, potentially, break them.

To help avert even greater food insecurity among low-income nations and to guarantee food imports, the UN agency recommended the creation of a balance-of-payment support mechanism.