Consequences of Market Disruptions on Fertilizer Intensification, Farm Productivity, Profitability, and Food Security in Egypt

Abstract

Fertilizers play a crucial role in feeding the world's population and achieving food security, yet recent disruptions in the global fertilizer market have affected pricing, usage, response, and efficiency of mineral fertilizers. We employed the Quantile Regression (QR) model to investigate the determinants of wheat and maize production across different productivity levels in Egypt and to analyze the impact of recent fertilizer market disruptions on farm productivity and profitability. Our empirical results indicate a 20.9% decline in total nitrogen fertilizer use per hectare in Egypt between 2018 and 2024, driven by a reduction in non-subsidized fertilizer use, highlighting a reliance on government support due to market volatility and high input costs resulting from geopolitical instability and global fertilizer market fluctuations. Furthermore, the results confirm that key production factors, such as nitrogen fertilizer use, land expansion, and institution structure, affect yields differently across production quantiles (farms), underscoring the limitations of a one-size-fits-all policy approach. Therefore, our findings advocate for context-specific policies, including tiered subsidies, differentiated extension services, and technology adoption strategies tailored to the specific context. Future policies should focus on empowering cooperatives to facilitate access to new technologies and training for farmers, as they are more likely to engage with cooperatives than with other organizations. In addition, supplementary investments in soil fertility, water management, and improved agricultural practices to reduce nitrogen fertilizer application and achieve economic and environmental benefits are crucial for long-term farm viability and food security. Furthermore, price transmission shifted from energy to agricultural inputs and then to food product prices, making government agricultural input subsidies essential for affordable food and food self-sufficiency. Finally, securing subsidized fertilizer is necessary to mitigate future shocks.