High fertilizer prices jeopardize Mexico’s crop yields

Dependence on fertilizer imports

Mexico imports 65% of its fertilizer consumption. Of the 6,5 million tons of fertilizer that Mexican farmers use, only 2 million tons are actually produced in the country, as domestic fertilizer production has gradually decreased over the last years. Even the Mexican Government imports 55% of the fertilizer it needs to hand out fertilizers to poor farmers. In 2021, 30% of Mexico’s fertilizer imports were bought from Russia.

Fertilizers are applied in 15 million of the 22 million hectares of agricultural land in Mexico and fertilizer costs amount to 30% of total production costs. 70% of Mexican farmers apply fertilizer. Mexico is currently the sixth largest buyer of nitrogenous fertilizers in the world and the seventh of urea. In 2021, the Mexican Government distributed 185.000 tons of fertilizer to Mexican farmers.

Impact on farmers

In this context, it is not surprising that the current rise in fertilizer prices due to high gas and oil prices, the interruptions in freight transport due to the COVID19-pandemi and the war in Ukraine, is a cause of great concern for Mexico’s agricultural production. As fertilizer prices have more than doubled since 2021, farmers around Mexico have reduced their fertilizer doses, thus jeopardizing crop yields. Some farmers have even decided to stop producing altogether, which will impact national food production, in particular for maize and beans.

Government measures

The Mexican Government has announced measures to avoid a decrease in agricultural production. On 4 May, it announced that the scope of its fertilizer handout programme will be expanded from four to nine states and that import duties for ammonium sulphate and other fertilizer inputs will be eliminated for a period of six months. At the same time, the Government plans to accelerate the activation of a number of fertilizer factories that are currently not operational for the production of urea and diammonium phosphate.