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Russia is one of the major players in global agricultural markets. The country is a significant exporter of grains, and also integrated into global agriculture as a supplier of inputs, particularly fertiliser. The country is a leading world supplier of the key ingredients of a range of them.
It’s therefore important to keep track of the impact of Russia’s
invasion of the Ukraine on various transmission channels, and the knock
on effects they could have on Africa’s agricultural markets.
So far the focus has been on the supply and price of grains and
oilseeds. The war presents upside risks to both because Russia and the
Ukraine make significant contributions to global exports of wheat, maize
and sunflower oil.
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There are also risks for countries that export to Russia. Globally the country is the 13th largest agricultural products importer
in value terms. The key products Russia imports include citrus, cheese,
bananas, wines, soybeans, apples, pears, beef and palm oil. These are
mainly sourced from a range of countries such as Belarus, Turkey,
Brazil, Germany, China, Ecuador, Italy, Indonesia, France and Germany.
In the case of South Africa, Russia accounted for 7% of its citrus exports in value terms in 2020. And it’s South Africa’s second-largest market for apple and pear exports.
But there’s a great deal more at play. Russia is the world’s leading exporter of fertiliser materials in value terms,
followed by China, Canada, the US, Morocco and Belarus. These
fertiliser mixtures include minerals or chemicals ranging from nitrogen
to phosphourous and potassium.
This disruption could push fertiliser prices even higher than the
spike experienced in the past 18 months. In some cases, for example in
ammonia, prices rose by 260% between December 2020 and December 2021.
This meant that farmers had to absorb substantial costs for the
2021/2022 crop across the world. The generally higher commodity prices,
specifically grains and oilseeds, provided financial flexibility to
absorb some of these costs, but not fully. The Russia-Ukraine war will
now be an added upside risk on prices for farmers.
For consumers, the knock on effects will typically be through the
size of the final harvest of the crop. Farmers are price takers, and
might therefore not necessarily pass on the input costs to consumers.
Fertiliser price dynamics
Fertiliser prices increased sharply in 2021 and remained elevated this year.
For instance, in January 2022, the international prices of a range of key fertiliser
ingredients shot through the roof. Since January 2021 the price of
ammonia has gone up by 220%, urea by 148%, di-ammonium phosphate by 90%,
and potassium chloride by 198%.
A range of factors have been behind these sharp input cost increases.
These include supply constraints in critical fertiliser-producing
countries such as China, India, the US, Russia and Canada. Rising
shipping costs, and high oil and gas prices have also been contributing
factors, along with firmer global demand from agriculture produces.
Even countries with small direct fertiliser imports from Russia, such
as South Africa – Russia’s 36th largest fertiliser materials market –
will feel the price pressures.
This week the US Secretary of Agriculture, Tom Vilsack, said
it was too early to know if the war in Ukraine would disrupt
international fertiliser trade. But he warned companies against taking
“unfair advantage” of the current circumstances by artificially
This low use of fertiliser has partly contributed to generally lower agricultural productivity in the region.
There are numerous reasons for this low use of fertiliser, including
affordability issues for the continent’s smallholder farmers. The current prices levels have exacerbated the problem. This could keep productivity levels low for the foreseeable future.
But the picture isn’t uniform. Countries such as South Africa are major fertiliser users, with an average of 72,8 kilograms of nutrients per hectare of cropland compared to the regional average of 19,9 kilograms.
Zambia is also an important fertiliser user, consuming 52,5 kilograms
of nutrients per hectare. Kenya and Nigeria are smaller fertiliser
consumers. Consumption for both is less than 30 kilograms of nutrients
It has often been argued that Africa needs to improve its
agricultural productivity to improve its food security. But for this to
happen there needs to be a financially conducive production environment.
As things stand, the cost of inputs like fertiliser don’t augur well
for the realisation of improved agricultural productivity on the
This is a global challenge for all farmers, and unfortunately, the
ultimate crop yields that farmers harvest is dependent on the use of
fertilisers. A reduction in fertiliser use, and the resulting negative
impact on yields, has implications for the consumers across the world,
particularly in poor countries where agriculture constitutes a
significant share of the economy.