How Russian Fertilizer Could Help Ease Some US Food Shortages
Despite the American condemnation brought on the war in Ukraine, a tanker carrying liquid fertilizer from Russia is coming to the United States.
As Reuters covered, this is occurring at a time when fertilizer prices are soaring due to Russia's invasion of Ukraine. Both Ukraine and Russia are major exporters of the fertilizer used in corn, soy, and wheat production in the United States. However, the disjunction between Washington's condemnation of Russia's actions and the allowance of letting Russia trade into the country has caused many companies not to purchase Russian supplies lest they run foul of later sanctions against the country.
The disruption in trade of Russian fertilizer is directly tied to corn prices, the prices of which hit a nine-year high (per CNBC). "Corn is the most fertilizer-intensive crop and is likely to be the most impacted by rising input costs driven by the spike in fertilizer prices," Jeremy Thurm, senior credit research analyst at Aegon Asset Management, told MarketWatch. Between sanctions and shipping firms showing solidarity with Ukraine, farmers either must reduce the amount of corn they grow or pay more for fertilizer. Either way, it translates to a higher cost of corn. If companies begin buying Russian fertilizer again — and currently that's a big if — then the price tag of corn may ease.
Alternatively, American companies highlighted by Fast Company that work to reduce fertilizer's use may see a boost in business as farms realize that a global supply chain is prone to disruption.
Washington wants people to buy Russian goods
It is worth noting that despite siding with Ukraine, the government wants companies to buy Russian fertilizer. Bloomberg reported that the government was quietly pushing for this as a way to alleviate the pressures behind the food shortages.
In fact, as Business Insider notes, fertilizer is exempt from both the US and the EU's sanctions against Russia. The issue, then, is that Russia manages to keep some kind of hold over those attempting to sanction it. Europe Reloaded named the EU's need for Russian fertilizer as one of its two Russian dependencies. The other is fuel. The piece quotes the Food and Agriculture Organization of the United Nations' assessment that "In 2021, Russia was the leading exporter of nitrogen fertilizers and the second largest supplier of potassium and phosphorus fertilizers."
The scale of the issue is seen in NPR's coverage of how farms all over depend on Russian fertilizer. Theoretically, others could produce fertilizer. For example, the US announced $250 million in grants for American-based fertilizer producers. However, the market was already tight before the invasion, meaning that filling the void left by avoiding Russian fertilizer may prove impossible for many farmers.