Recent shocks to global markets have once again highlighted the vulnerability of small-scale farmers to disruptions in fertilizer supply. Price volatility can quickly reduce access at the farm level, with direct consequences for productivity and incomes.
Disruptions to fertilizer and fuel shipments through the Strait of Hormuz have generated severe shocks to agricultural production and purchasing power, driven by fuel and food inflation. Fertilizer prices have doubled in some contexts (from ~US$350/mt to over US$700/mt within weeks), and fuel costs for small-scale producers have risen by up to 30%.
These price surges resulted in severe disruptions for small-scale farmers and producers worldwide, from Sri Lanka through Kenya to Sudan.
Up to 54% of fertilizers in some countries are imported from the Gulf. When those supply lines are threatened, the shock lands right at the farm gate, where the least capacity to absorb it exists.
The first mile under pressure
This is a recurring reality: external shocks – whether geopolitical, climate-related, or pandemic-driven – propagate rapidly through food value chains, reaching the first mile. The current crisis is the latest demonstration that the global food system is only as resilient as its most vulnerable node: small-scale producers with no buffer stocks, no price hedging and limited alternatives.
IFAD’s presence on the ground – working with local producers and small-scale agricultural businesses – provides a ground-level view of how this crisis is already being absorbed where it hurts most. In Sri Lanka, the energy crisis triggered by the conflict has crippled paddy harvesting. In Kenya, meat export volumes to Gulf markets, worth approximately US$2.3 million/week, are collapsing. In Sudan, rising input costs are straining an already fragile agricultural base.
A long-term framework
IFAD’s work seeks to address the underlying structural vulnerabilities that turn global shocks into local ones. This means investing in the first mile of food value chains – the farms, cooperatives and local economies where food systems begin.
Drawing on experience from previous crises, we have identified a set of activities that have proven efficient in fragile and crisis-affected settings.
- In Malawi, through the Sustainable Agricultural Production Programme, the Crisis Response Initiative supported the production and use of Mbeya hybrid fertilizer – a locally blended input combining inorganic fertilizer with organic materials. Farmers adopted it as a cost-effective alternative, producing 4,311 bags and improving yields while mitigating exposure to global price volatility.
- In Eritrea, IFAD enabled the production of liquid organic fertilizer from seaweed and fish waste, rapidly adopted by farmers and supported by public-private arrangements for scaling.
- Financing agroecological approaches, improved soil health and fertilizer use efficiency. This includes digital platforms (including IFAD’s partnership with NEC Corporation using CropScope) that integrate soil testing and tailored application advice, reducing input waste and linking producers directly to input suppliers.
Rapid deployment instruments: CRI and RED
When shocks occur, IFAD can deploy targeted instruments without abandoning its development focus. In response to current pressures, IFAD is reactivating the Crisis Response Initiative (CRI) – a mechanism originally launched in 2022 in response to the war in Ukraine – to deliver rapid, targeted support that protects rural livelihoods and stabilizes food production.
Concurrently, IFAD is activating the Response to Emergency and Disaster (RED) mechanism within existing programmes, enabling faster disbursements, procurement and operational reprioritisation.
These tools allow IFAD to meet immediate needs while safeguarding longer-term development outcomes.
The case for investing in rural resilience
Building resilience in the first mile of food value chains is key to mitigating the impacts of future shocks. It strengthens stability while also driving economic growth and jobs. Resilient rural economies are a geostrategic imperative for stable global food value chains in an era of geopolitical, climate and environmental volatility.
Investing in small-scale food producers and rural entrepreneurs also reduces the need for costly future interventions: every dollar spent on resilience reduces crisis response liabilities.
This is not the first shock, nor will it be the last. The question is not whether another disruption will occur, but whether the structural vulnerabilities that amplify its impact will have been addressed. IFAD has the specialized knowledge and operational footprint to help governments make those investments – before the next shock reaches markets, and before markets reach breaking point.
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Source: IFAD
