- Russia is a major exporter of fertilizer and fertilizer-related chemicals.
- Global fertilizer prices have reached record highs.
- War has disrupted supply and raised the price of natural gas, which is essential for fertilizer manufacturing.
Vladimir Putin is “weaponizing food,” and the consequences are being felt around the world, according to the CEO of one of the world’s largest fertilizer companies.
According to Svein Tore Holsether of Yara, countries must reduce their dependency on Russia after its invasion of Ukraine impacted global food supplies and pricing.
Russia is a major exporter of fertilizer and fertilizer-related chemicals.
However, the war has disrupted supply and raised the price of natural gas, which is essential for fertilizer manufacturing.
As a result, global fertilizer prices have reached record highs, forcing farmers to hike food prices, putting pressure on global consumers.”
“Putin has weaponized energy, and they’re also weaponizing food,” Mr. Holsether said at the start of the World Economic Forum in Davos.
“It’s the saying, ‘fool me once, shame on you. Fool me twice, shame on me.”
Fertilizer prices are rising, forcing farmers to reconsider
The warning echoes concern from the International Monetary Fund. managing director Kristalina Georgieva said the world should “move attention today to fertilizers because this is where we see the particular threat for food production and therefore food prices in 2023”.
She added: “Fertiliser prices remain very high. Production of ammonia [which is used to make fertilizer] in the European Union, for example, shrank dramatically. All of this is connected, of course, to the impact of Russia’s war on gas prices and gas availability.”
Last year, Russia stored fertilizer for domestic consumption. While its exports fell, record fertilizer prices resulted in a 70% gain in export profits, according to the UN Food and Agriculture Organization.
Moscow expanded exports to India and Turkey, among other countries. Russia also produces massive amounts of nutrients such as potash and phosphate, which are essential elements in fertilizers that allow plants and crops to thrive.
Mr. Holsether called this dependency a “strong weapon”.
“We’ve constructed an infrastructure in Europe on cheap Russian gas, and we’re seeing the ramifications and expense of that right now with food and fertilizer.”
“If you notice substantial disturbances on that, that’s a very powerful weapon.”
Severe consequences
Last year, Russia stored fertilizer for domestic consumption. While its exports fell, record fertilizer prices resulted in a 70% gain in export profits, according to the UN Food and Agriculture Organization.
Last week, analysts warned that rapid rises in fertilizer costs could reduce food production yields to the point where, by the end of the decade, an increase in the agricultural area the size of “all of Western Europe” will be necessary to meet global demand.
They went on to say that this would have “serious consequences” for deforestation, biodiversity, and carbon emissions.
“While fertilizer prices are fallen from earlier this year’s peaks, they remain high, and this may feed through to ongoing high food price inflation in 2023.”
Sustained high fertilizer costs may boost food prices by 74% from 2021 levels by the end of this year, the report predicted, generating fears of “up to one million more fatalities and more than 100 million people undernourished if high fertilizer prices continue”.
Mr. Holsether, the CEO of Yara, cautioned that the impact of all of this is being felt around the world.
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