The fertiliser crisis will affect coffee yields and farmer incomes for years

brazil coffee yields fertiliser crisis
  • The cost of fertiliser has soared since the outbreak of Covid-19 in early 2020
  • In September 2022, nitrogen fertilisers experienced a price rise of 149% compared to a year ago
  • Other factors will influence the extent of long-term productivity losses

“THE ONLY thing worse than expensive fertiliser,” says Jonas Ferraresso, a coffee agronomist and advisor based in Brazil, “is no fertiliser at all.”

His statement represents a truth that coffee farmers around the world have been facing since the onset of Covid-19. Fertiliser prices have reached their highest levels since 2008 following an 80% surge in 2021 followed by another 30% rise last year.

Russia’s invasion of Ukraine on the heels of the Covid-19 pandemic has exacerbated existing challenges and coffee farmers already under financial pressure have had to eat into profit margins to keep production alive. Others have been forced to overhaul the way in which they have cultivated their plants for decades – which has come at a considerable cost.

“A few producers who had reserves used a good part of the money to guarantee their stocks,” Jonas explains. “Others had to reduce quantities, which is not recommended, and others have partially or fully replaced traditional soluble fertilisers with organic alternatives.”

Brazil, with its mechanised farming systems and large coffee estates, is a fairly unique case compared to the rest of the world’s coffee production. Largely made up of smallholder farms, it has relatively few resources to fall back on in times of crisis. Yet the idea of building up reserves of fertiliser in anticipation of price increases as seen in the last two years is limited in most coffee origins.

“Fertiliser price hedging is still rarely used in coffee production in developing countries”, explains Martina Bozzola, a senior lecturer in Economics of Agriculture, Food and Health at Queen’s University, Belfast. “On top of this, smallholder farmers often lack the funds and infrastructure to stockpile fertiliser supplies to buffer against future price hikes.”

coffee farm in brazil

Why did fertiliser costs increase?

Despite their environmental impact, fertilisers are widely used in coffee production across many parts of the world. Consisting of agrochemicals such as potash, nitrogen, and phosphates, they help to improve yields, promote growth, and create bigger plants, particularly where soil quality is low.

Key components of fertilisers used in coffee production have been on the rise for more than two years. In 2022, phosphates and potash prices inched close to peak-2008 levels, and nitrogen fertilisers experienced a 149% price rise in September 2022 compared with the year before. At their highest, they were priced at some $1,500 per ton.

Soaring prices are driven by a combination of factors, including surging input costs, supply disruptions caused by sanctions from Russia and Belarus linked to the war in Ukraine, and export restrictions from China. The production of nitrogen fertilisers have been particularly affected as they depend on natural gas, which has also experienced a steep price hike. 

“Before the war with Ukraine and related sanctions, Russia ranked among the world’s top three exporters of nitrogen, potassium, and phosphorus fertilisers,” Martina says. “In addition, China has been curbing phosphate exports to protect its own agricultural industry. All these policies have affected the price of fertiliser, which was already high because of Covid-19 and hiked-up shipment costs.”

In addition, Brazil, the world’s largest coffee producer and also one of the world’s top five fertiliser consumers, was affected by its own set of circumstances.

“In Brazil, fertiliser prices are based on the international dollar price and the dollar price compared to the Brazilian currency”, says Jonas. “The appreciation of American currency between August and October 2022, combined with Brazilian currency going through several instabilities due to government elections, had already affected fertiliser prices. Inflation and Russian sanction finished this perfect storm.”

Today, fertiliser prices for Brazilian coffee farmers remain around 70% above the pre-pandemic era, according to Jonas. This reduces their bottom line considerably and is likely to have a global knock-on effect for coffee supply chains.

coffee yields

How will this affect coffee production in the long term?

A sudden decrease in fertiliser use or a switch to organic inputs will inevitably reduce productivity. In the short term, this affects farmers’ incomes and global coffee supply. But in the long term, it can have mixed results.

“Decreasing or stopping fertiliser use translates into lower yields, lower quality, higher costs of production, and lower income,” Martina explains. “This, in turn, affects farmers’ living income and efforts towards the eradication of poverty.”

For soils that are used to chemical inputs, poor application rates will decrease the nutritional quality of the soil, impacting both productivity and the quality of coffee cherries.

Some coffee farmers are looking for organic solutions to keep productivity up and chemical input use down. These include using organic matter like animal manure or organic composts, or sustainable agricultural practices like intercropping to increase soil quality and improve ecosystems.

Martina mentions state-of-the-art pyrolysis technology – turning coffee husks into biochar – as another solution being explored.

Breaking away from chemical input dependency is an important step for long term sustainability. But these practices require knowledge and considerable investment to be successful. And without support, low access to training and funds makes them an inaccessible option for most smallholder farmers.

According to the International Trade Centre’s Coffee Guide, the global area harvested for coffee has not increased significantly since the 1960s, but global yields have more than doubled. The fact remains that the use of chemical fertilisers, if properly applied, increases yield per hectare, which is why farmers have become so reliant on it.

“Keeping up productivity with less fertiliser may seem like a perfect green solution,” Martina says. “But it also means cultivating in a larger area. With new deforestation directives kicking in, this becomes tricky and is not always an economically sustainable solution for farmers.” 

Fertiliser prices have settled a little since December and are set regain some level of stability in 2023. According to Jonas, the impact on productivity is yet to have a noticeable impact on Brazil’s coffee yields this year.

“Even with raw material prices still high, coffee in the domestic market still remained at acceptable prices – enough for the producer to still be willing to invest in crops,” he says. “The loss of productivity predicted by several technicians for 2023 is directly linked to associated climate factors in 2021 and 2022.”

However, the consequences of the crisis remain palpable and farmers’ exacerbated struggles to turn a profit are still very real. Continuing to invest in fertiliser research and technology, combined with farmer trainings on best application rate, will help sustain coffee yields.

Balancing this by exploring green solutions that can be environmentally sustainable in the long-term without significant economic trade-offs for farmers will also be key for an eventual organic transition. And while it won’t be easy, it may help dampen the impact of crises in the future.