The “catastrophic” effect of war on global food production
The president of one of the world’s largest fertilizer companies has said that the war in Ukraine will impact the global supply and cost of food.
Yara International, which operates in more than 60 countries, buys considerable quantities of essential raw materials in Russia.
Fertilizer prices were already high due to the increase in wholesale fuel prices.
Yara’s boss, Svein Tore Holsether, warned that the situation could become even more difficult.
“Things are changing by the 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 fert needs to be moved and very probably that will be affected”.
Large producers
Russia and Ukraine are two of the main producers of food and agricultural products worldwide.
Russia too 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 obtains food thanks to the use of fertilizers… and if that is removed from the field for some crops, will be reduced by 40%,” Holsether said. .
“For me, it is not about whether we are heading towards a global food crisis, but how big the crisis will be,” he added.
Your company has already been affected for the conflict after a missile hit Yara’s office in Kiev. The employees were unharmed.
Svein Tore Holsether, chief executive of Yara International, told the BBC that the price of fertilizer was already high due to the rising cost of fuel.
The company based in Norway is not affected directly because of 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.
A few hours after Holsether spoke to the BBC, the Russian government urged its producers to stop fertilizer exports.
He noted that about a quarter of the key nutrients used in food production in Europe come from Russia.
“At the same time, we are doing our best at this time to find additional sources. But with such short deadlines, it is limited [lo que se puede hacer]”, he said before the news broke.
Analysts also warned that the measure 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 depends on large amounts of Russian gas for its European plants.
Last year, it was seen forced to temporarily suspend production around 40% of its capacity in Europe due to the increase in wholesale gas prices. Other growers also reduced supplies.
Combined with higher shipping rates, penalties to Belarus (another major supplier of potash) and extreme weather, this caused a large increase in fertilizer prices last year, which contributed to an rise in food prices.
The company says it is doing daily assessments on how to maintain supply.
Acknowledges that it has a “very strong responsibility” to keep production going at what it describes as a critical point.
“A catastrophe on top of another catastrophe”
But the president of Yara says that the world must , in the long term, reduce its dependence on Russia for world food production.
“On the one hand, we are trying to keep the flow of fertilizers to farmers to maintain yields agricultural yes 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, a very difficult one“, he points out.
Climate change and population growth had already added to the challenges facing the global food production system, all before the pandemic began.
The executive director 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.
He 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 millions more people who go to bed hungry… so the fact that this is now adding up is really worrying”, he warns.
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