The CEO of one of the world’s largest fertilizer firms warned that Russian President Vladimir Putin is weaponizing food, and the impact is being felt across the globe. The invasion of Ukraine has affected global food supplies and prices, and countries need to reduce their dependence on Russia.
At the start of the World Economic Forum in Davos, Yara International’s Svein Tore Holsether told the BBC that “Putin has weaponized energy and food as well.”
The warning comes at a time when the world, particularly poor and developing countries like Pakistan, is experiencing alarming food inflation. This trend is affecting low-income groups regardless of their location.
“If you fool me once, shame on you, but if you fool me twice, shame on me,” said Holsether, president and CEO of Yara – a Norwegian fertilizer company that produces, distributes, and sells nitrogen, phosphate, and potash fertilizers.
The war has caused supply issues and driven up the price of natural gas, which is vital to fertilizer production.
In response, global fertilizer prices have reached record levels, forcing farmers to raise food prices, putting pressure on consumers.
IMF MD Kristalina Georgieva said the world should “move attention to fertilizers today because this is where we see the greatest threat to food production and food prices in 2023”.
“Fertilizer prices remain high. The production of ammonia [the compound used to make fertilizer] in the European Union, for example, has decreased dramatically. This is all linked to Russia’s war on gas prices and availability,” Georgieva said, adding that high fertilizer prices threatened food production.
According to the UN Food and Agriculture Organization, while Russia’s exports declined last year, its export revenues increased 70 percent due to record fertilizer prices.
Russia also produces enormous amounts of nutrients, like potash and phosphate, key ingredients in fertilizers that allow plants to grow.
“With energy, we’ve built an infrastructure in Europe on cheap Russian gas, and we see the consequences and costs of that right now with food and fertilizer,” Holsether said.
Half of the world’s food production depends on fertilizer. “If that’s disrupted, that’s a very powerful weapon.” he said.
Impacts Are Visible
It was reported last week that sharp increases in fertilizer costs could lower food production yields by the end of the decade, requiring more agricultural land equivalent to “the size of much of Western Europe” to meet global demand.
According to the BBC, this would result in “severe impacts” on deforestation, biodiversity, and carbon emissions.
“This could be the end of an era of cheap food,” said Dr. Peter Alexander at Edinburgh University School of Geosciences. While almost everyone will feel the effects on their weekly shop, the poorest in society, who may already struggle to afford enough healthy food, will be hit hardest.
“Even though fertilizer prices are coming down from earlier this year’s peaks, they remain high, which may result in continued high inflation in food prices in 2023.”
Continuing high fertilizer prices could drive up food prices by 74 percent from 2022 levels by the end of this year, raising fears of “up to one million additional deaths and over 100 million people undernourished”.
All of this is having a global impact, Holsether said. “Russia exports fertilizer in the world in large amounts, so it will have a global impact,” he noted. “We’ve already seen some of that in the disruptions and Russian fertilizer is necessary to maintain global food production,” he added.
I want to emphasize, however, that we also need to think about the next phase to reduce, to avoid the dependency on Russia because when it is being used as a weapon in war, we cannot go back to how it was.”
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