Dependence on fertilizer imports dooms Philippine food security
The Covid-19 pandemic has further exposed the backward state of Philippine agriculture. Global agricultural production disruptions caused by lockdowns, quarantines, border controls and transportation production are aggravating the crisis in the local agricultural sector which is heavily dependent on imported inputs and is export-oriented. The food crisis, caused by decades of liberalization, monopoly of land ownership and lack of support for poor farmers, is even bound to worsen.
The absence of a self-sufficient fertilizer industry and low fertilizer consumption, especially in rice fields, corn fields and vegetable farms, are among the starkest manifestations of the non-industrial and agrarian backwardness of the Philippines. On average, the Philippines utilizes 157 kilograms of fertilizer per hectare of arable land. This is relatively low compared to that utilized in Vietnam (429.8 kg).
Fertilizer prices in the Philippines are extremely high relative to global average prices. The average price of urea, the most common type of fertilizer used by Filipino farmers, was P1,030 per 50-kg sack earlier in June this year. This is more than double the global average price of the commodity (P505) in the same month. Prices of other major grades of inorganic fertilizers including complete NPK (P1,072), ammonium sulfate (P586), ammonium phosphate (P961) and potassium chloride (P1,197) are similarly high compared to global average prices.
Relative to the national average, the most expensive fertilizers are being sold in Eastern Visayas, followed by Bicol. Both regions are mainly agricultural and the former also happens to be the fourth poorest region in the country.
Farmers are left at the mercy of big foreign agrochemical corporations as fertilizers being sold in local markets are mostly imported. In 2018, the Philippines imported a total of 2.37 million metric tons (MT) of fertilizer amounting to approximately P34.76 billion. This is equivalent to more than 75% of the total fertilizer supply (3.15 million MT) in the country during the same year.
In 2019, fertilizer imports further rose to 2.57 million MT amounting to P35.4 billion. Of this quantity, 40% (1 million MT amounting to P13 billion) was sourced from China. Substantial volumes were also imported from other Southeast Asian countries. The Philippines fully imports its urea supply as manufacturing plants are incapable of production. This was the biggest import (856,853 MT) in 2018. Urea (46-0-0) is widely used by farmers as it is non-toxic and easier to apply compared to other non-organic fertilizers.
Fertilizer importation has been practically limitless since quantitative restrictions and tariff were dismantled in the 1990s. These policies were implemented in compliance with the General Agreement on Tariffs and Trade and the Agreement on Agriculture of World Trade Organization to liberalize agricultural trade. These neoliberal schemes have further doomed any possibility for the country to develop a self-sufficient fertilizer manufacturing industry and perpetuated its import-dependence.
On the other hand, local fertilizer production is limited to just four private agrochemical companies, namely Soiltech Agricultural Products (which has a capacity of manufacturing 1 million MT/year), Atlas Fertilizer Corp. (230,000 MT), Farmfix Fertilizer (50,000 MT), and International Chemical Industries Inc. (22,000 MT). These companies are limited to blending raw materials such as phosphate rocks, anhydrous ammonia and sulfuric acid which they fully import from other countries, primarily China.
Currently, disruptions caused by the Covid-19 pandemic on the production of fertilizers across the globe pose a formidable challenge to the local agricultural sector. Last August, the global average price of urea sharply increased from just P536 in July to P624 per sack. The average recorded in 2019 was just P543.75.
This crisis will primarily affect palay farmers as 38% of the total fertilizer consumption goes to rice, followed by corn (21%), and fruits and vegetables (7%), and result in lower yields, hence, less food supplies for the people in the coming months.