Snarled supply chains, adverse weather conditions in top growing areas, and conflict in Ukraine have wreaked havoc on the world's agricultural system. The latest sign of an emerging food crisis is comments from a top US fertilizer company that warns it could take two to three years for farmers to resupply the world's grain stockpiles.
"Global grains stocks remain extremely low, an issue that has become amplified because of Russia's invasion of Ukraine.
"We think it will take at least 2-3 years to replenish global grains stocks," Illinois-based CF Industries Holdings Inc.'s president and chief executive officer Tony Will said in a statement in Wednesday's earnings report.
Over the years, Ukraine has earned the nickname "breadbasket of Europe" for its rich dark soil, vast wheat fields, and other farm goods. The Russian invasion has cut off the world from cheap and abundant farm goods.
Both Ukraine and Russia account for more than a quarter of the global wheat trade, about a fifth of corn, and 12% of all calories traded globally.
The invasion of Ukraine and the resulting Western sanctions have curtailed exports of grains from the region to the rest of the world. Also, there's a risk that at least 33% of farmland in Ukraine may go unplanted this spring because of the ongoing conflict. This will undoubtedly impact harvest yields later this year.
CF pointed out that low global grains stocks-to-use ratios have driven up corn, wheat, and other grains futures prices to the highest in decades as investors evaluate extreme tightness in markets.
The fertilizer company also said, "global nitrogen inventory remains extremely tight ... global supply continues to be limited by curtailments in Europe and Asia due to high energy costs, ongoing restrictions on exports of certain nitrogen products from Egypt, Turkey, and China, and obstacles to nitrogen exports from Russia related to the direct and indirect impact of various sanctions as well as government-imposed export limits."
Tight nitrogen inventory means prices will remain elevated.
Another top fertilizer company warned about crop nutrient supply disruptions.
Canada-based Nutrien Ltd.'s chief executive officer Ken Seitz told investors on Tuesday during a conference call that fertilizer supplies globally will be tight through 2023.
Two of the largest fertilizer companies in the world are warning about dwindling food and fertilizer supplies as this could indicate a global food crisis is ahead. The Rockefeller Foundation and Goya Foods CEO Bob Unanue have already sounded the alarm.