Saudi Fertilizers and Their Impact on Global Food Security: Present and Future

Abstract

This study was designed to assess the long-run association between the Kingdom of Saudi Arabia (KSA) and world export fertilizer (urea and DAP) prices. It also aims to disclose the effect of KSA fertilizer export quantities on global food security. KSA and world fertilizer prices and quantities were collected from various sources for the period ranging from 2002 to 2020. The results from the autoregressive distributed lag bounds and Engle–Granger two-step procedure tests discovered that there are long-run associations between KSA and world urea and DAP prices, respectively. Fully modified ordinary least squares and dynamic ordinary least squares model results were compatible with the results of the autoregressive distributed lag model. From the ECM results, the coefficient of adjustment parameter for KSA urea and DAP prices (as a dependent variable) proved positive and insignificant, leading to the conclusion that the model was powerless to right its previous time instability. This may be due to the short time interval of the series under study, and indicate that it requires more than 12 months to return to its long-run equilibrium. Likewise, the results showed that KSA fertilizer (urea and DAP) export quantities have a positive, highly significant impact on world urea and DAP export quantities. Reference to forecasting analysis results, the growth rates of urea exports quantities equal to 0.002 and 0.004 for the period from 2002 to 2018 and from 2019 to 2026, respectively. In addition, the growth rates of DAP export quantities equal to 0.45 and 0.07 for the period 2002 to 2018 and for the forecast period 2019 to 2026, respectively. With reference to KSA fertilizer exports, the importer countries rank among the main countries producing wheat, sorghum, maize, rice, and millet (chief food crops) in the world, showing that the KSA fertilizer (urea and DAP) export quantities contribute directly to global food security through fertilizer exportation and indirectly through the contribution of the importer’s countries in production of chief food crops. Recommendations drawn from the results are to increase the contribution of the KSA to global food security through lowering the time required to absorb fertilizer price shocks in the world (less than 12 months) and increase the KSA’s fertilizer export quantities.