High fertilizer prices to hit smallholder farmers, IFAD chief warns

The world’s fertilizer shortage has the potential to cause a “massive impact” on smallholder farmers amid the larger global food crisis, warns Alvaro Lario, the new president of the International Fund for Agricultural Development. 

One month into his new job, Lario’s Rome-based organization — a specialized agency within the United Nations that focuses on supporting subsistence farmers in rural areas — finds itself in the middle of escalating and overlapping climate and food crises. Lario, speaking to Devex on the sidelines of COP 27 in Sharm el-Sheikh, Egypt, is attempting to position IFAD to tackle both.

While he is optimistic about how IFAD’s programming can help smallholder farmers, Lario said the short term “doesn’t look very optimistic” and is “very challenging.”

“We have right now an issue with affordability of fertilizers,” he said. Next year, “if current prices of energy continue where they are, the supply of all the stock will be depleted and the supply of fertilizer will be extremely challenging. That’s gonna have a massive impact.”

This massive impact is stretching to the smallholder farmers IFAD works with, hindering their productivity even though they employ methods other than importing fertilizer, like organic fertilizer and agricology, said Lario.

“To be frank, many of our projects, our smallholders, they cannot absorb many of the prices [rising]. Some of them have to sell their land, some of them have to sell their food, their input to feed themselves,” Lario said.

While the U.N.-brokered Black Sea Grain Initiative between Russia and Ukraine paved the way to export grain from Ukrainian ports to the rest of the world, Lario said the deal was “not enough. … We also need to unlock the supply of fertilizer and make sure we address how it’s gonna be next year. If the prices of energy are the same level, it's challenging.”

A separate deal to export Russian ammonia, a key ingredient in fertilizer, has repeatedly hit snags. Russia — the world’s largest exporter of fertilizer — has said that Western sanctions make it difficult to export its grain and fertilizer, and warned that unless the issue is addressed, it could back out of the Black Sea Grain Initiative, which needs to be renewed later this month.

And if exports don’t resume soon during this planting season, the effects will be felt well into next year. High energy prices have also compounded the rising cost of fertilizer.

But the war in Ukraine and high inflation are symptoms of a deeper problem. Lario said the current crisis stems from “underlying weaknesses and underinvestment,” with the potential to worsen if there isn’t more resilience funding. “We will have more conflict, more migration, that will require much more money and in three years, five years, if we have not invested in resilience and development, we’ll have the same crisis all over again, and we’ll pay up much more in terms of humanitarian assistance.”

The concept of better preparing societies for the effects of climate change, known as climate adaptation, has shot to the top of the agenda at this year’s 27th United Nations Climate Change Conference. Traditionally, climate mitigation, which involves reducing fossil fuels to curb greenhouse gas emissions, has tended to dominate climate discussions — and funding.

But “when we talk about climate adaptation, you can see that people do not really understand what it is,” Lario said.

“In the case of agriculture, it’s very clear: It can be restoration of wastelands, it can be small-scale precision irrigation systems; we can talk about reforestation, water management, soil management, drought-resilient crops. It’s very clear what it implies,” he said.

“But in many cases, it seems like an abstract sort of concept. I always try to provide visibility of what it means for the people who are suffering. For poor people in rural areas, this is what they need.”