Ukraine war is ‘catastrophic for global food’

The head of one of the world’s largest fertilizer companies said the war in Ukraine would come as a shock to world food supplies and costs.

Yara International, which operates in more than 60 countries, purchases significant quantities of key raw materials from Russia.

Fertilizer prices were already high due to rising wholesale gas prices.

Yara’s boss, Svein Tore Holsether, has warned that the situation could get worse.

“Things are changing every hour,” he told the BBC.

“We were already in a difficult situation before the war … and now there is additional disruption to supply chains and we are approaching the most important part of this season for the northern hemisphere where there is a lot of fertilizer moving and that is very likely to be impacted will.”

Russia and Ukraine are among the largest agricultural and food producers in the world.

Russia also produces vast amounts of nutrients such as potash and phosphate – key components of fertilizers that enable plants and crops to grow.

“Half the world’s population is fed by fertilizers… and if that is taken off the field for some crops, [the yield] will drop by 50%,” said Mr Holsether.

“For me, it’s not about whether we’re moving into a global food crisis – it’s about how big the crisis will be.”

His company was already caught up in the conflict after a rocket hit Yara’s office in Kyiv. The 11 employees were not injured.

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 disruptions in the shipping industry.

Just hours after Mr Holsether spoke to the BBC, the Russian government asked its producers to halt fertilizer exports.

He pointed out that about a quarter of the most important nutrients used in European food production come from Russia.

“At the same time, we are doing everything we can do at the moment to find additional sources as well. But with such tight deadlines, it’s limited,” he said before the news broke.

Analysts have also warned that the move would mean higher costs for farmers and lower crop yields. That could lead to even higher food costs.

Nutrients are not the only factor to consider.

Huge amounts of natural gas are required to produce ammonia, the main ingredient in nitrogen fertilizer. Yara International relies on vast amounts of Russian gas for its European operations.

Last year it was forced to temporarily halt production of about 40% of its capacity in Europe due to surges in wholesale gas prices. Other producers also cut deliveries.

Combined with higher shipping rates, sanctions against Belarus (another major potash supplier), and extreme weather conditions, this has resulted in a large spike in fertilizer prices over the past year, which has contributed to a rise in food prices.

The company says it is making daily assessments of how to maintain supply and it’s too early to say if more shutdowns are imminent.

It recognizes it has a “very strong commitment” to keeping production running at what it calls a critical juncture.

But Yara’s boss says the world needs to reduce its dependence on Russia for global food production in the long term.

“On the one hand, we are trying to keep fertilizer 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 one that is frankly very difficult.”

Climate change and growing populations were already contributing to the challenges facing the global food production system—and all before the onset of the pandemic.

Yara International’s chief executive describes the war as “disaster upon disaster” and stresses how vulnerable the global food supply chain is to shocks today.

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

“We have to consider that in the last two years, 500 million more people went to bed hungry… so it’s really worrying that this is on top of that.”