The head of the world’s largest fertilizer company warns of imminent global shortages as supplies from Russia and Belarus become more limited than he himself anticipated.
Russia and Belarus are just huge fertilizer producers,” Ken Seitz, chief executive officer of Nutrien Ltd., said Thursday in an interview at Bloomberg’s New York headquarters. “There are export problems in the region. That will certainly have a significant impact on the markets.”
Two of the largest producing nations of potash – an important type of fertilizer – ended up exporting less due to trade restrictions and war. Seitz expects shipments from Belarus to be at least half that in 2021, after previously expecting a one-third to two-thirds drop. The CEO estimates that Russia’s exports have fallen by as much as 25%.
“The world will have to look to the other breadbaskets of the world to fill this food supply gap,” he said.
A global fertilizer shortage may seem like a distant problem to the billions of people who do not work in agriculture. But plant nutrients are critical to growing crops that feed the world’s growing population. Fertilizer shortages can lead to higher costs and lower yields, ultimately hitting consumers when food prices have skyrocketed.
About 60% of new production set to hit the market over the next five years is in Russia and Belarus, he said, adding it’s unclear how much of that will go online.
Meanwhile, demand continues to rise as the world population grows. The Saskatoon, Saskatchewan-based company has announced plans to increase its potash production capacity to 18 million tons by 2025, a 40% increase from 2020. If the market changes, the company can reevaluate the additional production, Seitz said.
Fertilizer prices fall from the highest levels in years as farmers postpone purchases to await lower prices, causing floods that are upending the crop supplies market. It’s a reversal from earlier this year, when prices skyrocketed following the Russian invasion of Ukraine, throwing the global fertilizer sector into disarray. Potash had also experienced price hikes due to sanctions against Belarus.
Still, farmers worldwide need to top up nutrients after applying most of their stored produce this year. Seitz sees global bottlenecks well into next year.
“For 2023, we really see no reason why that should change,” he said. “As we monitor trade flows now – particularly where potash prices are and have been – these producers are looking for every outlet they can find that they have now exhausted.”
Nutrien is seeing prepaid fertilizer sales — where farmers buy in advance to secure the product — about 15% to 20% higher than in 2020. Seitz expects farmers who didn’t buy this year and all of their stored produce used up will jump into the market and send prices up again.
“We believe that 2023 is not a demand-driven world, but a supply-driven world,” Seitz said. “There won’t be enough potash to get around.”
Bloomberg
