PARIS, 06 May. - (ANA) - Fertilisers are crucial components of food systems, with impacts beyond agricultural markets, according to report by the OECD. 

 

This study utilises the OECD-FAO Aglink-Cosimo model to examine the intricate interplay between fertiliser markets, policies, and their repercussions on agricultural markets, food security, and environmental sustainability over the medium term. 

 

Two distinct scenario analyses reveal significant insights. The first scenario shows that while short-term disruptions in fertiliser supply can be mitigated by existing stocks, prolonged deficits will increase global food prices by up to 6%, posing long-term threats to agriculture. 

 

In the second scenario, the removal of fertiliser subsidies in India leads to reduced domestic use, resulting in decreased agricultural production and exports coupled with increased imports. 

 

Although this will cause a modest 0.8% increase in global food prices, it will substantially cut agricultural greenhouse gas emissions by 7 million tonnes of CO2 equivalent, highlighting the pivotal role of domestic policies in attaining global environmental sustainability goals.

 

 

 

 

• Fertilisers are indispensable for enhancing agricultural yields and ensuring food security. Recent price hikes have underscored their critical role.

 

• Given their far-reaching impacts on food systems, economic stability and the environment, fertiliser markets are extensively regulated. However, challenges lie in designing policies that effectively bolster affordability while mitigating the adverse environmental impacts associated with excessive usage.

 

• This report presents two separate scenario analyses: one examining potential supply shortages of fertiliser, and the other exploring the hypothetical elimination of fertiliser support in India. These analyses aim to assess these hypothetical shocks on agricultural markets, food security, and environmental sustainability over the medium term.

 

• The results of the supply shortage scenario indicate that the existence of stocks somewhat mitigates the negative short-term impacts on yields However, prolonged shortages can have lasting adverse effects on the agricultural sector. Hence, it is imperative to understand and effectively manage the duration of potential shortages to uphold a resilient and sustainable agricultural ecosystem.

 

• Eliminating fertiliser support in India prompts a rapid reduction in domestic fertiliser use, which leads to a decrease in agricultural production and exports, while simultaneously causing an increase in imports. The decline in nitrogen prices and rise in rice prices, influenced by India's substantial role as both a nitrogen user and rice supplier, have only a modest impact on global food prices and minor adverse impacts on food security worldwide.

 

• Results suggest that global agricultural greenhouse gas emissions would decrease notably, due to the substantial reduction in fertiliser application in India and the moderated increase in fertiliser use elsewhere. This highlights the crucial link between domestic policies and global environmental sustainability goals.   - (ANA) -

 

 

To download the full report, visit: https://www.oecd-ilibrary.org/docserver/b1606a57-en.pdf?expires=1714997778&id=id&accname=guest&checksum=847E1FE8FE46A16AAEA73E2FA5B7B36A

 

AB/ANA/06 May 2024 - - -