Former President of Costa Rica on De-Risking Fertilizer Shocks: How $700 Billion in Subsidies Can Do More

Why It Matters

The inefficiency of current ag subsidies directly undermines global food security and climate targets, while offering a concrete lever for governments and businesses to lower fertilizer‑price risk and accelerate sustainable agriculture.

Key Takeaways

• Global fertilizer prices up 40% due to energy market shocks.
• Governments spend $700 bn annually on ag subsidies, 87% harmful.
• Only $0.35 of value returns to farmers per subsidy dollar.
• Redirecting subsidies to soil health could aid 500 m smallholders.
• 2026 COPs create political window for fertilizer subsidy reform.

Pulse Analysis

Fertilizer price volatility has become a recurring shock to global food systems. The surge in natural‑gas prices—driven by geopolitical tensions in Ukraine and the Middle East—has lifted nitrogen fertilizer costs by roughly 40%, inflating input expenses for farmers and raising alarm among food‑and‑beverage manufacturers, commodity traders, and insurers. Supply‑chain managers now face higher contract breach risks and heightened sovereign credit exposure in key sourcing regions, prompting a search for more resilient sourcing strategies.

At the same time, the $700 billion annual flow of agricultural subsidies represents one of the world’s largest pools of untapped, patient capital. Yet current allocations deliver only $0.35 of real value per subsidized dollar, and the majority of funds support fossil‑fuel‑intensive inputs that exacerbate price shocks. Redirecting a fraction of this spending toward soil‑health initiatives, precision nutrient management, and climate‑adapted cropping can lower input costs, boost long‑term productivity, and safeguard the livelihoods of over 500 million smallholder farmers. For ag‑tech investors, this shift creates a clear market for technologies that improve nutrient efficiency and carbon‑sequestering practices.

The political calendar amplifies the urgency. In 2026, three pivotal COPs—UNCCD on land, CBD on biodiversity, and UNFCCC on climate—will converge, offering a rare policy window to reframe subsidies as climate‑smart infrastructure. Governments that tie public support to measurable sustainability outcomes can unlock private capital, reduce emissions from agriculture, and strengthen food security. Companies that align their supply‑chain risk models with these emerging subsidy reforms will gain a competitive edge, while policymakers can demonstrate tangible progress on climate and biodiversity commitments.