Instability of trade in nitrogenous fertilizers


Background

Nitrogenous fertilizers are made on industrial scale from ammonia.

Incidence

Many fertilizer plants in Europe closed down in 2020 following the increase in gas prices by nearly a third after Russian gas supplies to Europe via the Nord Stream 1 pipeline were reduced to 20% over the summer.   The limitation of gas supplies was coincident with the war in Ukraine. It was predicted that "cascading supply-side shocks" could keep fertilizer prices elevated well into 2023 and may pressure farmers in the upcoming growing season, adding to even more food inflation as less fertilizer equals smaller harvests. This could switch the EU from being a key food exporter to an importer, putting more pressure on fertilizer prices and consequently affecting the next planting season.


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