Global Fertilizer Supply Is At Risk Due To Dependence on Russia, Says Norwegian Fertilizer Producer

A combine harvester loads a truck with wheat in a field near the village of Hrebeni in Kyiv region, Ukraine July 17, 2020. (Valentyn Ogirenko/Reuters)

The Russian invasion of Ukraine is beginning to threaten the global food supply, said Norwegian fertilizer producer, Yara International in a March 1 press statement.

The Norwegian company recommended that the international community needs to reduce its dependence on Russian raw materials for agriculture fertilizer.

Fertilizer prices were already rising sharply at the end of 2021, following natural gas costs.

Russia produces 25 percent of the European supply of nitrogen, potash, and phosphate which are key ingredients for producing nitrogen-based fertilizers; along with over 40 percent of its natural gas.

Yara, which is one of the world’s biggest fertilizer manufacturers, is a supplier to the Ukrainian agricultural sector and a major buyer of materials used for fertilizer, such as phosphate and potash, from Russia.

Russia also provides the natural gas used for nitrogen required to make fertilizer.

Ukraine and Russia are both major exporters of basic foodstuffs, accounting for about 29 percent of global wheat exports, 19 percent of world corn supplies, and 80 percent of world sunflower oil exports.

Russia is also one of the biggest suppliers of strategic metals, such as titanium, gold, cobalt, iron, and platinum. It supplied 6 percent of the world’s aluminum, 40 percent of palladium, and 30 percent of global diamond production in 2021.

“With the geopolitical conditions out of balance, the biggest sources of raw material to Europe’s food production are being subject to limitations, and there are no short-term alternatives,” said Yara.

Higher food prices could lead to famine for the most vulnerable, Yara warned.

“One potential consequence is that only the most privileged part of the world population gets access to enough food,” said Yara, adding that while high prices may have a short-term positive impact on profit, they would mean an unsustainable food system, leading to starvation and conflict in the long term.

“It is therefore crucial that the international community come together and work to secure world food production and reduce dependency on Russia, even though the number of alternatives today is limited,” Yara said.

Exports have been halted in Ukraine, due to restrictions on commercial ships in the Sea of Azov, which has disrupted food shipments.

Wheat futures have soared since last week due to concerns that Russia’s invasion of Ukraine will continue to disrupt grain shipments from the Black Sea region.

Further restrictions in wheat supply could increase prices in several parts of the world, including Australia, Argentina, and the American Midwest.

Ukraine is among the world’s biggest grain exporters, with China and the European Union as its biggest consumers.

If Ukrainian farmers are not able to tend to their crops during harvest season in four months, due to military operations, or if ports and infrastructure are heavily damaged, the situation could be critical, say experts.

Executive Director of the World Food Programme (WFP), David Beasley, said on Twitter, “Just when you thought it could not get any worse …. Now, food, fuel & transport costs will skyrocket. An absolute catastrophe,” as the war could have a dramatic impact on the organization’s ability to reach the 120 million people dependent on its food aid.

As of the morning of March 1, benchmark soft red winter wheat futures in Chicago were up to $9.84 a bushel, the highest since 2008 and 27 percent higher from the start of the year.

Hard red wheat breached the $10 per bushel mark and milling wheat in Paris is near an all-time high.

Corn futures also rallied at a staggering pace, up almost 22 percent this year at its highest level since May 2021.

Reuters contributed to this report.