The chairman of one of the world’s largest fertilizer companies has said the war in Ukraine will hit the global supply and cost of food.
Yara International, which operates in more than 60 countries, purchases significant quantities of essential raw materials from Russia.
Fertilizer prices were already high due to rising wholesale fuel prices.
Yara’s boss, Svein Tore Holsether, warned that the situation could become even more difficult.
“Things are changing every hour,” he told the BBC.
“We were already in a difficult situation before the war … and now there is an additional disruption in the supply chains and we are approaching the most important part of this season for the northern hemisphere, where a large amount of fertilizer and most likely that will be affected.
big producers
Russia and Ukraine are two of the world’s leading producers of food and agricultural products .
Russia also produces huge amounts of nutrients, such as potash and phosphate, key ingredients in fertilizers that allow plants and crops to grow.
“Half of the world’s population gets food from using fertilizers…and if that’s removed from the field for some crops, [yield] will drop by 50%,” Holsether said.
“For me, it’s not about whether we’re heading towards a global food crisis, but how big the crisis is going to be,” he added.
His company has already been affected by the conflict after a missile hit Yara’s office in kyiv. All 11 employees were uninjured.
The Norway-based company is not directly affected by the sanctions against Russia, but has to deal with the consequences. Trying to secure deliveries has become more difficult due to the disruption in the shipping industry.
Just hours after Holsether spoke to the BBC, the Russian government urged its growers to stop fertilizer exports.
He pointed out that about a quarter of the key nutrients used in food production in Europe come from Russia.
“At the same time, we’re doing everything we can right now to find additional sources. But with such short deadlines, it’s limited [what can be done],” he said before the news broke.
Analysts also warned that the move would mean higher costs for farmers and lower crop yields. That could translate into even higher costs for food.
Huge amounts of natural gas are needed to produce ammonia, the key ingredient in nitrogenous fertilizers. Yara International relies on large amounts of Russian gas for its European plants .
Last year, it was forced to temporarily suspend production of around 40% of its capacity in Europe due to rising wholesale gas prices. Other producers also reduced supplies.
Combined with higher shipping rates, sanctions on Belarus (another major potash supplier), and extreme weather, this led to a big spike in fertilizer prices last year, which contributed to a spike in food prices. .
The company says it is making daily assessments on how to maintain supply.
He acknowledges that he has a “very heavy responsibility” to keep production going at what he describes as a critical point.
“A catastrophe on top of another catastrophe”
But Yara’s chairman says the world must, in the long term, reduce its dependence on Russia for global food production.
“On the one hand, we are trying to keep fertilizers flowing to farmers to maintain agricultural yields. At the same time… there has to be a strong reaction. We condemn the Russian military invasion of Ukraine, so this is a dilemma and frankly, very difficult ,” he says.
Climate change and population growth had already added to the challenges facing the global food production system, all before the pandemic began.
The chief executive of Yara International describes the war as “a catastrophe on top of another catastrophe” , highlighting how vulnerable the global food supply chain is now to shocks.
It adds that food insecurity will increase in the poorest countries.
“We have to take into account that in the last two years there has been an increase of 500 million more people going to bed hungry … so the fact that this is now adding up is really worrying,” he warns.
Link: https://www.bbc.com/mundo/noticias-60642862
Author:
- emma simpson
- BBC Business Correspondent
