FARM fertiliser "affordability" is starting to improve across the globe, with a likely recovery in application in some regions in 2023, Rabobank says in a new report.
But in most cases, demand will take some time to return to pre-pandemic levels.
In its semi-annual Fertiliser Outlook, the global agribusiness banking specialist said most fertiliser prices were gradually returning to their historical averages, after skyrocketing over the past two years due to the impacts of COVID-19 and the Russia/Ukraine war.
The Improved Affordability Ahead report said global fertiliser prices had begun to trend higher in 2021 due to supply chain constraints resulting from the pandemic.
Affordability deteriorated further when fertiliser prices set new record-high levels after Russia invaded Ukraine, reducing supply from the region and also resulting in higher production costs.
By that time, Rabobank analyst Vitor Pistoia said, "reasonable prices for agricultural commodities were the only reason fertiliser didn't become as unaffordable as it was in 2009 during the global economic crisis".
He said prices continued to remain above average for some agricultural commodities, due to tighter stocks.
"The combination of still-positive commodity prices and lower fertiliser prices is helping fertiliser affordability for farmers," Mr Pistoia said.
"Although globally, consumption may take two or three years to recover and the speed of recovery will depend on how long the positive cycle lasts," Mr Pistoia said.
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For Australia, the Rabobank report said in recent years, fertiliser demand had grown despite the price hikes, as the country enjoyed good seasonal conditions and a surge in grain and oilseed production.
"Every year since 2020, grain and oilseeds yields have exceeded the previous year's production, with 2022 winter and summer crop seasons combined reaching an historically high 72 million metric tonnes, a 130 per cent surge," the report said.
"At the same time, cropping area increased 27 per cent from roughly 20m hectares to 25.5m hectares."
Mr Pistoia said good weather driven by La Nina and investments in crop management had underpinned this "phenomenal growth".
Apparent fertiliser demand in the same period moved from 5.4mmt to about 6.6mmt, a 21pc increase, according to the report.
"Although the conditions for the 2023 crop seasons are a bit different, they do not signal a reversal in the trend of historically-high cropping area and a significant application rate," Mr Pistoia said.
"The drop in farm input prices is greater than that of commodity prices, and this is slowly improving farmers' buying power."
