Fertilizer prices experienced a significant surge in 2021, driven by the post-COVID 19 global economic recovery. Russia’s February 2022 invasion of Ukraine propelled prices even higher. Broad economic sanctions on key fertilizer exporters Russia and Belarus exempted agricultural products but triggered further economic disruptions. Overall, the conflict heightened market uncertainties regarding the availability of potash, phosphate, and nitrogen-based fertilizers in international trade.

Recurring spikes and high volatility in international food and fertilizer prices (Figure 1) have triggered economic impacts around the world over the past two decades. These major shocks include the global food price crises of 2007-2008 and 2010-2011, the market disruptions of the COVID-19 pandemic, and the Russia-Ukraine war. In the months after Russia’s February 2022 invasion, real global food prices reached the highest levels on record in more than six decades, while key global fertilizer prices more than doubled over those of the previous year.

Figure 1

The FAO Food Price Index declined by 1.6 percent from December. While the Index was 6.2 percent higher than its January 2024 level, it remains 22 percent below its peak of March 2022.

Fertilizer use plays an important role in increasing agricultural production and ensuring food availability and economic accessibility: two critical components of overall food security. When global fertilizer prices skyrocketed in 2021-2022, those spikes brought with them concerns about drastically reduced fertilizer application and subsequent negative impacts on food production, prices, and food security.

In 2024, the FAO Food Price Index was 2.1 percent lower than its 2023 average. While the December 2024 Index was higher than its December 2023 value, it also remained well below the peak prices seen in March 2022.

Rising dairy and vegetable oil prices drove the FAO Food Price Index up by 5.7 percent from November 2023 and to the highest value seen since April 2023. The Index remained more than 20 percent below the peak reached in March 2022, however.

The FAO Food Price Index rose 2 percent in October to reach its highest level since April 2023. However, the Index remained 20.5 percent below the record high seen in March 2022.

Over the past two months, India has removed several of its restrictions affecting rice exports, some in place since September 2022. This is welcome news for rice importing countries, which for the past year have had to seek alternative suppliers at significantly elevated prices.

In September, the FAO Food Price Index saw the largest month-on-month increase since May 2022, rising 3 percent from August. While the Index is 2 percent higher than its September 2023 level, it remains over 22 percent below its March 2022 peak.

The FAO Food Price Index declined slightly in August due to falling sugar, meat, and cereal prices. The Index was just over 1 percent lower than its August 2023 value and nearly 25 percent below the peak reached in March 2022.