Rice for Millions Put at Risk as Fertilizer Prices Hammer Peru

(Bloomberg) -- The global fertilizer squeeze exacerbated by Russia's invasion of Ukraine is imperiling rice production in Peru, where the seed is a staple for tens of millions of people.

Prices of the crop nutrient urea have surged almost fourfold amid supply scarcities, adding to cost inflation for growers, according to the Peruvian Association of Rice Producers.

“The situation is critical,” association boss Edwin Edquen Altamirano said in an interview with Radio Exitosa. “We are losing money.”

Like in much of Asia, rice is a culinary cornerstone in Peru as well as a source of income for an estimated 150,000 growers. As such, the fertilizer shortfall is the latest threat to global food security as the war chokes crop nutrient supplies from the Black Sea, a major producing region. 

In Peru, the prospect of losses for rice growers is feeding into a tense political situation. President Pedro Castillo just survived an impeachment attempt at a time of social unrest amid surging fuel and food prices, with politicians grappling for solutions as some protests turn violent.

Local political upheaval including cabinet changes have seen negotiations for rice producer subsidies dry up, Altamirano said. “That is going to cause us to stop planting rice because it is not profitable now.”

Consumer prices in Lima rose 6.82% in March from a year earlier, the most since August 1998, with the central bank expected to raise its benchmark interest rate by half a percentage point on Thursday.

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