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Ukraine war ‘catastrophic for global food’

Mar, 07, 2022 Posted by Gabriel Malheiros

Week 202210

The war in Ukraine will deliver a shock to the global supply and cost of food, the boss of one of the world’s biggest fertiliser companies has said.

Yara International, which operates in more than 60 countries, buys considerable amounts of essential raw materials from Russia.

Fertiliser prices were already high due to soaring wholesale gas prices.

Yara’s boss, Svein Tore Holsether, has warned the situation could get even tougher.

“We were already in a difficult situation before the war… and now it’s additional disruption to the supply chains and we’re getting close to the most important part of this season for the Northern hemisphere, where a lot of fertiliser needs to move on and that will quite likely be impacted.”

Russia and Ukraine are some of the biggest producers in agriculture and food globally.

Russia also produces enormous amounts of nutrients, like potash and phosphate – key ingredients in fertilisers, which enable plants and crops to grow.

“Half the world’s population gets food as a result of fertilisers… and if that’s removed from the field for some crops, [the yield] will drop by 50%,” Mr Holsether said.

The Norwegian-based company isn’t directly affected by sanctions against Russia, but is having to deal with the fall-out. Trying to secure deliveries has become more difficult due to disruption in the shipping industry.

Nutrients aren’t the only factor to consider, either.

Huge amounts of natural gas are needed to produce ammonia, the key ingredient in nitrogen fertiliser. Yara International relies on vast quantities of Russian gas for its European plants.

Last year, it was forced to temporarily suspend production of about 40% of its capacity in Europe because of the spike in the price of wholesale gas. Other producers also cut supplies.

Combined with higher shipping rates, sanctions on Belarus (another major potash supplier) and extreme weather – this prompted a big jump in fertiliser prices last year, adding to a surge in food prices.

The company says it’s making day-to-day evaluations on how to maintain supply and that it is too early to say if more shutdowns may be on the cards.

Climate change and growing populations had already been adding to the challenges the global food production system faces – all before the pandemic started.

The Yara International chief executive describes the war as “a catastrophe on top of a catastrophe”, highlighting just how vulnerable to shocks the global food supply chain now is.

It will increase food insecurity in poorer countries, he adds.

Source: BBC News

To read the full original article please see:

https://www.bbc.com/news/business-60623941

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