Sunday, 27 November

Russia-Ukraine war worsening global fertiliser crisis: FAO, IMF, WB, WFP, WTO warn of prolonged food crisis

General News
Fertiliser markets remain volatile, especially in Europe

The volatility of the global fertiliser industry is persisting as a result of the ongoing Russia-Ukraine war, which may protract the current global food crisis, a second joint statement from world organisations calling for urgent action to address the global food security crisis has noted.

It was jointly signed by the Food and Agriculture Organization of the United Nations (FAO) Director General Qu Dongyu, International Monetary Fund (IMF) Managing Director Kristalina Georgieva, World Bank Group (WBG) President David Malpass, World Food Programme (WFP) Executive Director David Beasley and World Trade Organization (WTO) Director General Ngozi Okonjo-Iweala.

The world leaders said: “Fertiliser markets remain volatile, especially in Europe, where tight natural gas supplies and high prices have caused many producers of urea and ammonia to stop operations”, warning: “This may reduce fertiliser application rates for the next crop season, prolonging and deepening the impact of the crisis”.

Read the full statement below:

The war in Ukraine continues to exacerbate the global food security and nutrition crisis, with high and volatile energy, food and fertiliser prices, restrictive trade policies, and supply chain disruptions. Despite the reprieve in global food prices and the resumption of grain exports from the Black Sea, food remains beyond reach for many due to high prices and weather shocks. The number of people facing acute food insecurity worldwide is expected to continue to rise. Fertiliser markets remain volatile, especially in Europe, where tight natural gas supplies and high prices have caused many producers of urea and ammonia to stop operations. This may reduce fertiliser application rates for the next crop season, prolonging and deepening the impact of the crisis.

There has been considerable progress in four key areas we had highlighted in our first joint statement. Announced or implemented social assistance measures across all economies quadrupled from 37 to 148 between April and September 2022. We welcome the efforts of the Global Crisis Response Group and the Black Sea Grain Initiative: through the Joint Coordination Centre, over 3 million metric tons of grain and foodstuffs have already been exported from Ukraine. We are encouraged by the downward trend of trade restrictive measures implemented by countries and hope that the trend continues. International financial support to the most vulnerable countries is increasing from various initiatives. The World Bank is implementing its $30 billion program to respond to the food security crisis and frontloading resources from the IDA20 Crisis Response Window. The IMF is proposing a new food shock window within the IMF emergency lending instruments. The FAO has proposed a series of policy recommendations and launched detail soil nutrition maps at country level to increase efficiencies in the use of fertilisers.

Maintaining momentum on these fronts and building resilience for the future will require a continued comprehensive and coordinated effort to support efficient production and trade, improve transparency, accelerate innovation and joint planning and invest in food systems transformation:

1. Support efficient production and trade: Governments in all countries need to urgently re-examine their agricultural trade and market interventions, such as subsidies and export restrictions, to identify and minimise distortions. Shorter interventions cause less harm than indefinite ones. Promoting the production of nutritious foods and repurposing the US$639 billion support per year provided to agriculture by governments can transform food systems and improve food security and nutrition. Preserving open trade in food, agriculture, and energy can reduce price distortions that dilute incentives for efficient production. Countries should follow through on commitments made at the WTO’s 12th Ministerial Conference to restrain export restrictions on food and fertilisers and put in place trade facilitation measures. We also welcome clarifications of relevant regulations to allow critical agricultural inputs such as fertilisers to move swiftly to countries in need.

2. Improve transparency: Food market monitoring serves as an important and efficient early warning mechanism and must be supplemented with transparent tracking of financing by the international community to respond to the food crisis. Governments should provide necessary data and resources to support Agricultural Market Information System (AMIS), which enhances transparency in food markets through monitoring the prices and availability of major food crops and promoting policy responses. In addition, the Global Alliance for Food Security (GAFS) is harmonising existing tracking systems in a dashboard to enable governments and country teams to identify needs and channel financing to respond to the crisis.

3. Accelerate innovation and joint planning: Agricultural research and development is a chronically underinvested sector, while it has one of the highest returns on public spending . Innovation is crucial for meeting the long-term challenges to global food security and nutrition posed by climate change, land and ecosystem degradation, pests, and transboundary plant and animal diseases. Disseminating best practices from FAO and supporting the Consortium of International Agricultural Research Centers (OneCGIAR) are important actions to address these challenges. Such efforts should also lead to more systematic coordination and joint planning to connect short-, medium- and long-term opportunities and deliver support in a timely manner.

4. Invest in food systems transformation: Strengthening the resilience of food systems to risks, including conflict, extreme weather events , economic shocks and diseases is key for the longer-term response. Addressing both infrastructure bottlenecks and input supply bottlenecks (e.g., fertilisers and seeds) are critical to an efficient food supply system. Effective and sustainable support to smallholder farmers will be vital to ensure they are part of the solution and to localize supply chains. The private sector has a critical role to play, and the International Finance Corporation (IFC) will establish a Global Food Security Platform that will provide working capital and longer-term financing for sustainable agribusinesses and related sectors in the food supply chain. Deeper integration of markets can also help avoid price spikes of essential goods and drive economic diversification and job creation to build overall resilience.

We remain committed to working together to address immediate food security and nutrition needs, tackle structural market issues that may exacerbate adverse impacts, and build countries’ resilience to prevent and mitigate the impacts of future crises.

Source: Classfmonline.com