The Russian-Ukrainian conflict, which started two months ago, is reshuffling the maps of global political and economic geostrategy. It is in the process of profoundly reshaping the global fertilizer market, and Morocco has found itself at the center of the issues.
The conflict in Ukraine affects both the food industry (Russia and Ukraine being major exporters of cereals) and the fertilizer sector (Russia being a major supplier of raw materials – natural gas, phosphate, potassium, ammonia -). Result: fertilizer importers must now deal with the absence of Russian exports.
Fertilizers gained another 10% in the first quarter of 2022 following rising 80% in 2021. The fact that the prices of this input are high and volatile raises fears of low availability of fertilizers in 2022-2023, which might have repercussions negative effects on food production and food security. This year, the World Bank estimates that they would increase by another 70% before falling in 2023. in development. Reduced input use will weigh on food production and quality, affecting food availability, rural incomes and the livelihoods of the poor,” says John Baffes, Senior Economist in the Outlook Division. of the World Bank.
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Morocco at the center of the world
On the ground now, international fertilizer supplies remain tight, stocks are tight, and geopolitical tensions might lead to further supply restrictions at short notice. Due to these uncertainties, global demand is emerging increasingly strong with rushed purchases of phosphate fertilizers. But suddenly, with this extreme tension on fertilizers, Morocco, which has 75% of the world’s reserves of phosphate (a mineral used in fertilizers) is more than ever coveted everywhere.
The question of fertilizers has simply become an absolute priority, judging by the agenda of the Brazilian Minister of Agriculture, Marcos Montes. Already, on March 16, during a virtual meeting with the Director General of the Food and Agriculture Organization of the United Nations (FAO), he demanded that the sanctions targeting Russia and Belarus do not relate to food or chemical inputs for production. This request was made by Brazil, which currently chairs the Agricultural Council of the South (CAS), a body resulting from the Mercosur trade bloc and which brings together the ministers of agriculture of Argentina, Bolivia, Brazil, Chile, Paraguay and Uruguay. On behalf of the CAS, the Brazilian minister insisted that the economic sanctions adopted once morest Russia “spare the global food chains”. “Otherwise, we will create another, even more serious problem, since, according to FAO estimates, hunger affects more than 800 million people in the world. »
This week, Marcos Montes is expected to fly to Morocco in an attempt to secure larger stocks for his country. The tour also planned, in Egypt and Jordan, aims to study for Brazil, the increase in imports of fertilizers from these countries, reports Archyde.com. Brazil, which depends on 85% of its fertilizer needs, is worried regarding a possible global shortage of products following Western countries imposed sanctions on major Belarusian and Russian producers, while China restricted exports.
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Brazil’s dependence on fertilizers has often been mentioned since it became one of the world’s leading producers of soybeans, corn, beef, poultry and coffee. The country imports 95% of the nitrogen, 75% of the phosphate and 91% of the potassium that it consumes, according to data from the Ministry of Agriculture. Nearly 23% of these purchases come from Russia, including half of the potassium consumed nationally. As for Belarus, which supplies nearly 7% of the fertilizers used in Brazil, it has announced that it can no longer honor its commitments, with the closure of its border with Lithuania.
It is with this in mind that “fertilizer diplomacy” was set up by Brazil. A tour of the Brazilian Minister of Agriculture Montes, which will last 8 to 10 days. Brazil also aims to encourage foreign investors to produce fertilizers in Brazil, he said.
Morocco, which is Brazil’s third fertilizer supplier following Russia and Belarus, along with other countries such as Qatar, Egypt and Oman, provides 26% of the fertilizers imported by this country, which wants to compensate for the drop registered of its imports of this substance following the outbreak of the conflict in Eastern Europe.
Already last December, the Kingdom was the first exporter of mineral or chemical fertilizers containing additional substances to Brazil. Brazilian imports of this product from Morocco had reached 75.37 million dollars, according to the Arab-Brazilian Chamber of Commerce, or 62.91% of Brazilian imports of this product last month (119.8 million dollars).
Currently, there are a large number of countries requesting Morocco’s help to source fertilizers on the national market. The Peruvian Minister of Agricultural Development and Irrigation, Oscar Zea, announced on Friday May 6 that his country will buy fertilizers from abroad and in particular from Morocco, in a transparent process. In this context, his department has already submitted a proposal to the Peruvian Ministry of Economy and Finance to urgently authorize the provision of 900 million shillings (22 million euros) to finalize the purchase of these fertilizers, let the site peruvian Management. “There have been talks with the governments of Morocco, Venezuela and Bolivia…Logistical arrangements are being made so that these inputs reach the farmers quickly,” the minister added.
For its part, Guyana is also in talks with Morocco, in order to obtain its assistance. During a visit to the Leonora market on Saturday April 30, Dr Irfaan Ali, president of the Cooperative Republic of Guyana, indicated that the head of Guyanese diplomacy is discussing with Morocco a possible reduction in the cost of fertilizers, which are currently very high, reports Guyanatimesgy.com. “Minister Hugh Todd is currently working on an initiative. We have been talking with Morocco for a while now to see if we can engage them directly on the fertilizer issue. We are making progress now and by July we should have some positive news,” he said.
On the side of the European Union, which imports from Russia both fertilizers and the gas essential to manufacture them, the stakes are high since the Russian government recommended that its fertilizer producers suspend their exports. “In 2021, Russia was the leading exporter of nitrogen fertilizers and the second largest supplier of potassium and phosphorus fertilizers,” recalls the FAO. “40% of European gas supply currently comes from Russia”, which provides “25% of European supply” in nitrogen, potash and phosphate, alerted this specialized UN body. The European Union consumes “more than 11 million tonnes of synthetic nitrogen” every year according to a recent report by Green MEPs. It therefore depends on Russia both for its gas and its direct imports of fertilizers. Today, Europe will have to turn to other sources. To increase its phosphate inputs, for example, Europe might turn to Morocco, China and the United States, which are the leading producers.
On the African continent, it is hoped that Morocco and the OCP group will continue to play their role in the development of African agriculture, especially with the threat of the food crisis hanging over Africa. As a reminder, OCP, which is present in 12 African countries, including Nigeria, Ghana, Côte d’Ivoire and Senegal, held in 2020 a market share of 54% of fertilizer exports to Africa. . In effect, rather than just exporting the raw material (phosphate), the Kingdom decided decades ago to become one of the largest fertilizer producers in the world. According to the author of the recent Middle East Institute (MEI) report, Michael Tanchum, a senior policy officer associated with the Africa program of the European Council on Foreign Relations (ECFR) and non-resident policy officer at the Middle East Institute in Washington, Morocco raised its ambitions and became a “guardian of the world’s food supply”. More than 630,000 farmers have benefited from an OCP program called Agribooster, which has led to significant increases in crop yields. The yield of maize in Nigeria has thus increased by 48% and that of millet in Senegal by 63%, it is specified. “Morocco is achieving impressive increases in agricultural yield across Africa, preventing the continent’s food crisis from worsening,” said Michael Tanchum.
Today, the OCP has also announced its ambition to increase its production by 10% this year, in order to meet the ever-increasing global demand for fertilizer caused by the Russian-Ukrainian war. It is a question of reaching 11.9 million tonnes this year once morest 10.8 million tonnes a year earlier. As a result, the Kingdom is well on its way to outclassing Russia, once morest which European sanctions have been taken in terms of fertilizer exports. As proof, the Russo-Ukrainian war is having a negative impact on the Russian phosphate fertilizer giant PhosAgro, the biggest competitor of the OCP group in the East.
