The fertiliser price has driven through the roof in recent times.Thus as expected farmers are going to be paying a lot for fertiliser in at least the next six months. But, are things the worst they have ever been? Really no! Global fertiliser prices are getting high only in current (nominal) dollars. If we whant examining long term pricing data, it is important to consider also inflation. In fact, its should to note, that in real terms, they aren’t yet as high on an annual basis as in the past. When we take into account inflation, the 1973/4 period was the record by a long shot. A dollar in 1960 buys more than a dollar in 2021. In fact, examining the nominal price of fertiliser from the 1960s to the present, we can see that the situation its nowhere near as bad as the extent of the fertiliser pricing in 1973/74. We can see that even the 2008 rise is nowhere near the same levels which were experienced in 1974. But, what drove prices to those levels in 1974? Another energy crisis! During that time, indeed, there was a huge increase in the energy prices caused by OPEC embargoes on nations that had supported Israel in the Yom Kippur war. Energy also was the primary driver during the largest rise in fertiliser pricing during 1977. Fertilisers are produced through energy-intensive processes. A supply shock and increasing energy cost caused fertiliser prices to go rampant, now as in the past. The high prices that we experience this year likely will hurt farmers, but at the moment, we are nowhere near facing the same level of energy issues as the world experienced during 1973. At this time, however, another problem could came from energy transition to renewables. According to some analysts, indeed, if we switched to 100% renewables too quickly, then we could expect higher fertiliser pricing. Thus, the transition to renewables needs to be conducted with a planned approach as currently, the world is a long way off being prepared to switch off coal and gas. (Sourced by TEM)
