While people grappled with a severe food crisis and farmers saw their costs increase, the world’s largest fertiliser companies tripled their profits during the past five years. The profits of the big nine fertiliser companies grew exponentially from an average of around US$14 billion before the Covid-19 pandemic to US$28 billion in 2021 and then to an astounding US$49 billion last year, a brief published by GRAIN and the Institute for Agriculture and Trade Policy (IATP) reveals. The document released on May 23th presents the latest data on fertilizer industry profits and is an update to the report ““The Fertiliser Trap”, published by the two organisations in November 2022. GRAIN and IATP look at how these companies have contributed to the current food crisis by increasing prices far beyond increases to production costs and thereby boosting their profit margins by a massive 36% in 2022. “To deal with fertiliser cartel’s profiteering, actions must focus on supporting farmers to reduce or eliminate their use of chemical fertilisers”, they write in the brief. Such actions would not only help to bring the costs of fertilisers down, but could also help address the climate crisis and its impacts on food production due to the greenhouse gas emissions caused by chemical fertilisers.

The two organisations say that there are shocked by the scale of profiteering. Given the sky high fertiliser prices of 2022, it was expected that fertiliser companies would generate large profits but GRAIN and IATP were surprised by the record revenues the firms earned. A graph compiled by the organisations depicts the total profits of the big nine fertiliser companies over the past five years, rising from $14 billion dollars before the pandemic to US$28 billion in 2021 and then to US$49 billion in 2022. The report says that international agencies like the World Bank argue that the Russian war in Ukraine is responsible for the spike in fertiliser prices because the war lead to high natural gas prices (used to produce nitrogen fertiliser) due to shortages and trade disruptions. But another graph presented in the report shows that the problem also has to do with the monopoly power of the fertiliser companies. The big nine fertiliser companies increased prices far beyond the increases in production costs and boosted their profit margins to a massive 36% in 2022.

According to the report, “fertiliser prices are coming down from their stratospheric heights earlier this year, but the effects of the price spike are still being felt. The high prices and lack of supply in some countries caused farmers to cut fertiliser use, thereby reducing production levels and contributing to an alarming rise in global food insecurity.” The NGOs argue that the high prices have also pushed many farmers deeper into debt: “Farmers from Cameroon to the U.S. say they are still spending three times as much on fertilisers as they were a few years ago. And in countries where fertilisers are heavily subsidised, the price spike has saddled governments with huge debts.” The report cites India as an example where the central government’s expenditure on fertiliser subsidies last year skyrocketed from US$9.8 billion to US$17.1 billion. The organisations denounce that “people are paying the price for the fertiliser industry’s price gouging.” Not only people but also the planet is paying a high price. Chemical fertilisers are a major source of environmental pollution and greenhouse gas emissions, with nitrogen fertilisers alone accounting for one out of every 40 tonnes of annual emissions.

IATP and GRAIN say that bold new approaches are urgently needed to reign in corporate power in the food system and turn the food crisis around. When it comes to fertilisers, policy actions like windfall taxes and price controls could be a solution. But to deal with both profiteering and environmental catastrophe we need to transition food production to rely far less on chemical fertilisers. “The fertiliser industry will be pushing for the opposite when it gathers for its annual meeting in Prague this week, yet around the world there are farmers and rural movements already leading a transition away from chemical fertilisers, with plenty of successful examples to learn from,” they write. What’s holding us back is the structural political change needed at all levels to address the excess profiteering from the fertiliser industry, and chart a new path toward more resilient food systems, the brief concludes. (ab)