Food Prices To Rise Again As Russia Conflict Further Reduces Fertilizer Supplies

drone view of agriculture tractor
Daniel Balakov / Getty Images/iStockphoto

Food prices that are already at their highest point in more than a decade are set to push even higher amid a global shortage of fertilizer that has worsened since Russia invaded Ukraine.

SNAP 2022: Will My State Provide Extra Money in March?Compare: 16 Ways To Save Money on Food Now That Prices Are Rising

Fertilizer prices were already on a steep rise due to supply bottlenecks tied to the COVID-19 pandemic, as well as the rising cost of natural gas to produce it, Bloomberg reported. The invasion of Ukraine by Russia — a key supplier of fertilizer and other crop nutrients — will only add to the problem.

As an example, Bloomberg pointed to prices for urea, a common nitrogen fertilizer. In New Orleans, the weekly price of urea surged 29% after Russia invaded Ukraine — a record gain for the 45-year Green Markets index.

The result is that farmers will face higher costs to produce food, and consumers will see higher prices in grocery aisles and at restaurants.

Make Your Money Work for You

“We could be tightening fertilizer supplies ahead of the North American growing season, and that would impact a whole year’s global production,” Arlan Suderman, chief commodities economist at financial-services network StoneX, told Bloomberg.

This is not a new problem. In December, farmers asked the U.S. Department of Justice to investigate whether recent fertilizer price spikes were the result of market manipulation by fertilizer companies, Reuters reported. The request was made in a letter sent to the agency by the Family Farm Action Alliance, an organization that includes more than 6,000 farmers and rural members.

The letter alleged that fertilizer companies were setting prices based not on basic supply and demand, “but rather on the price the farmer is paid for their commodity crops.” It was sent after global fertilizer prices reached record highs in 2021.

One concern is that consolidation in the U.S. fertilizer sector has resulted in two companies — Nutrien Ltd. and Mosaic Co. — controlling 93% of the North American potash market, according to a 2020 report by the Federal Trade Commission.

See: Date Night Just Got More Expensive: Babysitting Rates Outpace Inflation by 4%
Explore: Powell Confirms March Rate Hike, Says Attack on Ukraine has ‘Uncertain Implications’ for US

Make Your Money Work for You

Government officials have taken note. Iowa’s attorney general commissioned a market study on the “unprecedented” increase in fertilizer prices, Bloomberg noted, while U.S. Department of Agriculture Secretary Tom Vilsack has warned fertilizer companies and other farm suppliers not to take “unfair advantage” of the Ukraine conflict by engaging in price gouging.

More From GOBankingRates

Share this article:

facebook sharing button
twitter sharing button
linkedin sharing button
email sharing button
Make Your Money Work for You

About the Author

Vance Cariaga is a London-based writer, editor and journalist who previously held staff positions at Investor’s Business Daily, The Charlotte Business Journal and The Charlotte Observer. His work also appeared in Charlotte Magazine, Street & Smith’s Sports Business Journal and Business North Carolina magazine. He holds a B.A. in English from Appalachian State University and studied journalism at the University of South Carolina. His reporting earned awards from the North Carolina Press Association, the Green Eyeshade Awards and AlterNet. In addition to journalism, he has worked in banking, accounting and restaurant management. A native of North Carolina who also writes fiction, Vance’s short story, “Saint Christopher,” placed second in the 2019 Writer’s Digest Short Short Story Competition. Two of his short stories appear in With One Eye on the Cows, an anthology published by Ad Hoc Fiction in 2019. His debut novel, Voodoo Hideaway, was published in 2021 by Atmosphere Press.
Learn More


See Today's Best
Banking Offers