The sharp increase in the prices of mineral fertilizers, which has taken place in recent months, will affect the increase in food prices, Crédit Agricole analysts believe. They estimate that in 2022 the dynamics of food and non-alcoholic beverages prices will increase to 4.4 percent y/y against 2.8 percent in 2021.
In recent months, we have witnessed a strong increase in the prices of mineral fertilizers, which is global in nature. The index of world fertilizer prices published by the World Bank increased in the period January-September this year by over 56 percent. Moreover, the beginning of October brought a strong acceleration in the growth of fertilizer prices, the Bank's experts inform.
Analysts point out that the main reason for the rising prices of fertilizers is the recently observed strong increase in natural gas prices. The production of nitrogen fertilizers is based on the Haber-Bosch process, which combines nitrogen with hydrogen to form ammonia. While air is the source of nitrogen, the source of both hydrogen and the energy needed to produce ammonia is natural gas. Consequently, natural gas accounts for 60-80 percent of production costs of nitrogen fertilizers, which explains the sharp increase in their prices in recent months.