Economists Simon Roberts and Ntombifuthi Tshabalala from the University of Johannesburg have said that global fertilizer suppliers made incredibly high profits in 2022/23 on the back of price spikes attributed to the Russia-Ukraine war. The profits of the world’s top nine producers trebled in 2022 from previous years.
The margins and impacts have been even greater on fertilizer supplies to African farmers. Meanwhile, the super-high profit margins are being sustained in 2023 in many African countries while international prices have come down. The harvest season has recently come to an end in most countries in southern Africa, with farmer margins and production being squeezed by high input costs.
The wide gaps between fertilizer prices in the region and international fertilizer prices point to major issues within the supply chain, with excess margins of some 30% to 80% being earned on sales to many African countries. Both economists’ research focuses on fertilizer and agri-food markets in the African Market Observatory, which points to major problems with how international and regional markets work, including the market power of large international suppliers. High prices for fertilizer inputs are squeezing African farmers who are cutting back on fertilizer use, meaning low yields and supply, and high food prices. This therefore calls for international action that is urgently required on fertilizer prices to improve food security in Africa.