GLOBAL CRISIS: Phosphate rock production, fertilizer use and food prices
In the equation on food security, the focus of the debate has been mainly on the effects of global warming, climate change, severe droughts, flash floods, accelerated urbanisation, marginalisation of farmers, phyto-sanitary challenges, inequity in technology diffusion, expensive bank collaterals, soaring oil prices and shift to biofuels. However, less attention seems to be given to the consequences of surging prices of phosphate rock. Little thought has been given in understanding how the underlying link between phosphate rock and global food security can contribute to mitigate the future food crises.
During the 2008 global food crisis, the correlation between phosphate production and soaring food prices went unnoticed. Phosphate rock plays a fundamental role in global food production. It constitutes around 82% of the elements used to produce fertilisers. Phosphate rock, being a key in the production of fertilisers, has no substitute and it is non-renewable.
It is estimated that 90% of the phosphate rock is concentrated in the US, China and Morocco. Other important sources of phosphoric production are Algeria, Tunisia, Egypt, Jordan, Syria, Saudi Arabia, South Africa, Russia, Brazil and Kazhakstan. Morocco alone accounts for 76% of global phosphate reserves.
The spike in fertiliser prices in 2008 which accompanied the global food crisis, was to a large extent triggered by China which imposed a 135% export tariff on phosphate rock. It tantamounted to effectively banning phosphate fertiliser exports. Between February and August 2008, the price for phosphate surged from less than $45/mt to $430/mt. Even today, the prices for phosphate fertiliser have remained above pre-2008 crisis levels and have been steadily rising along with food prices ever since.
A renewed food crisis must be avoided at all costs. The pressure on demand for phosphate fertiliser is growing due to an increasing trend in biofuel production and a rapid transition towards more fertiliser-intensive meat and dairy production. With the ongoing political turmoil in North Africa and Middle East – an important phosphate belt – there are strong reasons for policy-makers to be well advised on the issue of phosphate rock production. Unfortunately, there is no international mechanism, in the style of OPEC, which can respond to price-volatility of phosphate rock and fertilizers. Under such circumstances, it is imperative for research organisations and relevant international bodies to understand the link between phosphate rock production, fertilizer use and food prices.
