Rice Farmers are Reducing Fertilizer Use Due to Rising Prices

Rice farmers across Asia are cutting back on fertiliser use due to rising fertiliser costs, threatening harvests of a staple that feeds half of humanity and could lead to a full-fledged food crisis if prices aren't brought down.

Prices of crop nutrients critical to increasing food production have doubled or tripled in the last year alone in India, Vietnam, and the Philippines. It's possible that using less fertilizer will result in a smaller crop. According to the International Rice Research Institute, yields could drop 10% next season, resulting in a loss of 36 million tonnes of rice, or enough to feed 500 million people.

That's a "very conservative estimate," according to Humnath Bhandari, a senior agricultural economist at the institute, who added that if the war in Ukraine continues, the impact could be far worse.

Fertilizer prices have been rising globally as a result of supply disruptions, production issues, and, most recently, trade disruptions with Russia, a major supplier of every major crop nutrient. If farmers continue to cut back and crop yields suffer, the rise in fertilizer costs threatens to fuel food inflation. If this happens, global supply chains are likely to be severely harmed: fertilizers are used in almost every plate of food that makes it to the dinner table.

Farmers who grow rice are particularly vulnerable. Rice prices have remained stable despite ample production and existing stockpiles, unlike wheat and corn, which have seen skyrocketing prices as the war threatens one of the world's major breadbaskets. As a result, rice farmers are dealing with rising costs while also receiving less money for their crops.

The price of a 50-kilogram sack of urea, a type of nitrogen fertilizer, has increased threefold in the last year, according to Nguyen Binh Phong, the owner of a fertilizer and pesticide store in Vietnam's Kien Giang province. Due to rising fertilizer prices, he said some farmers have reduced fertilizer use by 10% to 20%, resulting in lower output.

"When farmers reduce fertilizer use, they accept a lower profit," he explained.

Governments in Asia, which harvest a large portion of the world's rice, are keen to avoid this scenario. Given rice's importance as a staple for hundreds of millions of people, particularly the poor, politicians must keep prices under control. Many countries provide fertilizer subsidies in order to boost the yields of improved cereal crop varieties.

Their financial burden is being increased by the fertilizer rally. India, which imports a lot of fertilizer, plans to spend about $20 billion to protect farmers from rising prices, up from about $14 billion in February's budget. The South Asian country is the world's second-largest rice exporter, with destinations including Saudi Arabia, Iran, Nepal, and Bangladesh.

A rice farmer in Telangana said he's having trouble keeping up with the rising cost of fertilizer. Because of the delay in obtaining enough supplies, he expects yields for his winter-sown crop to drop by 5-10%. Fertilizer is most effective when applied to plants during their active growth phase.

The crunch isn't all bad, though. Chemical fertilizer overuse is rampant in the area. According to the International Rice Research Institute, which is working with growers to achieve optimal results, the rise in prices is incentivizing farmers to use resources more efficiently. To maintain yields while improving soil health, solutions include using a combination of chemical and organic inputs.