Business

The Other Reason Why Food Prices Are Rising

Remy Gabalda | AFP | Getty Images

The United Nations' worst-case scenario calculation is that global food prices will rise by an additional 8.5% by 2027.

More expensive fertilizers are contributed to those higher costs, with some fertilizers spiking 300% since September 2020, according to the American Farm Bureau.

"Last year [fertilizer] was around $270 per ton and now it's over $1,400 per ton," Meagan Kaiser, of Kaiser Family Farms and farmer-director of the United Soybean Board, told NBC's "Nightly News with Lester Holt."

"It's scary. It turns my stomach a little bit to think about the amount of risk that our family farm is taking right now."

Farmers are finding themselves forced to pass some of those costs along to customers, resulting in higher grocery prices.

Fertilizer is essential for crops. Without fertilizer, plants may not get the nourishment they need to result in the yields necessary to meet global demand.

According to the International Fertilizer Association, we would only be able to feed about half of the global population without fertilizer.

Farmers are trying to adjust to this new normal. When surveyed in spring 2022 about what they intended to plant, farmers said they were turning to more soybean, according to U.S. Department of Agriculture data, or a record 91 million acres of the legume. That may be because legumes don't require as much fertilizer as corn to grow.

Spikes in fertilizer prices started when Russia invaded Ukraine in 2022.

"It's amazing how dependent the world is on fertilizers from the region that we're talking about Russia and Ukraine," Johanna Mendelson Forman, adjunct professor at American University's School of International Service, told CNBC.

The region is responsible for at least 28% of the world's fertilizer exports, including nitrogen-, potassium- and phosphorus-based fertilizers, according to Morgan Stanley.

Also factoring into price spikes are rising natural gas costs.

"There's a direct relationship with what we're seeing in fuel prices and fertilizer prices," Jo Handelsman, director of the Wisconsin Institute for Discovery at the University of Wisconsin-Madison, told CNBC.

That's because fossil fuels are used in the manufacturing process of fertilizers — and is one of the reasons that they can contribute to climate change.

Plus, if farmers overuse fertilizers, the chemicals can run off into waterways, causing environmental damage, pollution and illnesses.

"I'm not saying that the fertilizer is bad ... our soil naturally has nutrients," Ronald Vargas, secretary of the Global Soil Partnership for the United Nations. "If [soil] is naturally depleted, then you need to find a way to make those nutrients available."

Watch the video above to learn more about the world fertilizer crisis amid supply chain woes and its climate change impact, while exploring potential solutions on the horizon.



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