Fertiliser Shockwave: World Bank Warns of Middle East Driven Price Surge

World Bank Boosts Domestic Agriculture Amidst Global Supply Chain Concerns

The World Bank is injecting significant financial support into domestic agriculture, a crucial move as global geopolitical tensions, particularly in the Middle East, cast a long shadow over the international supply of essential agricultural inputs, most notably fertilisers. This heightened instability raises palpable anxieties about potential shortages and subsequent price hikes for vital farming commodities, directly impacting food security worldwide.

Agricultural Economist at the World Bank Ghana office, Dr. Ashwini Rekha Sebastian, articulated these concerns during a recent World Bank Civil Society Organisation Engagement focused on food security in Accra. She highlighted that the prevailing geopolitical climate is fostering apprehension not only regarding the availability and cost of agricultural inputs but also concerning staple food prices, with rice being specifically mentioned as a commodity under pressure.

The global fertiliser market is currently experiencing a significant upswing in prices. Urea, a cornerstone nitrogen-based fertiliser, has seen its price surge by over 50 percent, climbing to exceed US$700 per tonne. This dramatic increase is directly linked to the disruption of key supply routes stemming from the Middle East crisis.

Key Impacts on Fertiliser Supply:

• Strait of Hormuz Disruptions: The conflict poses a direct threat to maritime shipments passing through the Strait of Hormuz, a critical chokepoint for global trade.
• Ammonia Price Surge: This disruption has contributed to a 24 percent escalation in ammonia prices.
• Natural Gas Bottlenecks: Further exacerbating the situation are bottlenecks in natural gas supply, a fundamental component in the production of nitrogenous fertilisers.

The escalating costs are evident across the board. Global urea prices have climbed from below US$425 per metric tonne to a concerning US$600–US$700 per tonne. Similarly, ammonia prices have seen a substantial rise, jumping 24 percent from US$495 per tonne in late February to over US$600 per tonne by mid-March.

Despite these formidable global challenges, Dr. Sebastian expressed optimism that progress is attainable through targeted and strategic investments. The World Bank has thus identified and committed financial resources to several key sub-sectors within the broader agricultural landscape.

World Bank’s Investment Initiatives in Ghana:

The organisation has made a substantial commitment of approximately US$75 million towards a vital cocoa rehabilitation initiative. This programme is designed to restore around 25,000 hectares of cocoa farms across Ghana, a sector currently grappling with the dual pressures of disease outbreaks and declining productivity.

Funded under the West Africa Food Systems Resilience Programme (FSRP) and operating under the purview of the Ministry of Food and Agriculture, this investment aims to:

• Revitalise severely affected farmlands.
• Improve crop yields.
• Strengthen farmer incomes.
• Enhance the long-term sustainability of the cocoa sector.

Beyond the critical cocoa sector, the FSRP is actively supporting the development of robust seed systems in selected regions. This includes conducting trials for improved tomato varieties engineered to withstand the challenges of dry season conditions, a particularly pressing issue for agricultural productivity in northern Ghana.

Dr. Sebastian further detailed the scope of interventions:

• A US$12 million initiative specifically targeting commercial poultry farmers.
• A significant US$200 million grant intervention dedicated to supporting tree crops.
• A grant facility of up to US$20 million designed to boost tomato production.

Osei Owusu Agyeman, the Project Coordinator for the FSRP in Ghana, elaborated on the programme’s objectives. In addition to its broader agricultural focus, the FSRP aims to achieve a local production target of 6,000 metric tonnes of tomatoes. This ambitious goal is intended to significantly reduce the nation’s reliance on imports, which currently fill a substantial gap created by insufficient local output.

The project’s strategy involves equipping 1,500 farmers with essential training and providing them with climate-smart seeds and inputs. The anticipated outcome is an impressive yield of 15-20 tonnes per hectare. This focus on enhanced yields and improved inputs is crucial for addressing persistent challenges such as post-harvest losses and seasonal shortages.

The engagement in Accra brought together key Civil Society Organisations (CSOs) actively involved in Ghana’s agricultural sector. Notable participants included:

• The Economic Governance Platform (EGP)
• The Peasant Farmers Association (PFAG)
• The Rice Farmers and Millers Association
• The Ghana National Association of Poultry Farmers

This dialogue represents a continuation of a collaborative effort between the World Bank and the EGP. The partnership is dedicated to fostering evidence-based policy development, promoting progressive reforms, and facilitating focused discourse among critical development actors in Ghana’s agricultural domain. The World Bank’s sustained commitment underscores the vital role of domestic agriculture in navigating global economic uncertainties and ensuring national food security.