The Magazine for Asian Investors
Various mainstream media have already reported that fertilizer could continue to be in short supply this year. This could now be felt especially by poorer countries that are dependent on fertilizer. The prices for fertilizers based on phosphorus and potassium have more than doubled in the last year. But that is not enough. Prices for nitrogen fertilizers have even more than quadrupled.
U.S. Senator Roger Marshall commented, “Fertilizer is vital to feeding not only the country but the world. It contains essential nutrients for plant life, and without it, American agricultural yields will quickly suffer as well as food prices in local grocery stores.”
As fertilizer prices rise, so will the cost to farmers, making it difficult for them to grow profitably. Mainstream media reports that farmers in South America growing avocados or coffee, or in Southeast Asia growing oil palms or coconuts, are having difficulty with rising prices. It’s not far off that farmers in developing countries, especially those already struggling with low margins, are being squeezed even further with higher costs. These will have to pass on the high costs to consumers through increases in product prices, which in turn means higher prices for the population. Regions, where the population has suffered greatly from the COVID closures, have seen very high increases in unemployment. Especially in Southeast Asia, where many countries depend on tourism for a significant portion of their income, unemployment has increased dramatically overnight. Most of the people who worked in the tourist regions are not officially registered as workers, which is why the official unemployment figures are far below the actual numbers.
The shortage of fertilizer will sooner or later be reflected in food prices or the supply of food. Therefore, one should keep an eye on this shortage.