Ukraine war: ‘It is essential to reduce dependency on Russia’ says fertiliser boss

Svein Tore Holsther was commenting on the situation in Ukraine and the long-term consequences of the war on global food supply.

Mr Holsther warned it will impact both the rich and the poor parts of the world and said it is “essential to reduce the dependency on Russia”.

Ukraine is one of the world’s leading agricultural nations and is the second biggest producer and supplier of grains.

Farmers are entering a crucial stage in the season and input factors such as fertiliser, seeds and water will determine the yield of the coming harvest.

The most extreme calculations indicate that crops could be reduced by 50 per cent by the next harvest if fertiliser is not added to the soil.

In addition to being one of the largest producers of wheat, Russia has enormous resources in terms of nutrients.

Plants need nitrogen, phosphate, and potash to grow.

Nitrogen is supplied from ammonia, which is produced from nitrogen from air and natural gas.

The importance of gas has been on the agenda during the debate around the high European gas prices in 2021 and beginning of 2022.

Forty per cent of the European gas supply is currently coming from Russia.

With regards to potash (a salt extracted from clay deposits), the market is highly concentrated and fragile towards change.

Today, 70 per cent of extracted potash and 80 per cent of all exported comes from Canada (40 per cent), Belarus (20 per cent) and Russia (19 per cent).

In total, 25 per cent of European supply of these three nutrients come from Russia.

Yara is “extremely concerned about the grave situation” in Ukraine.

In fact, the Norwegian-based company has been impacted directly by the conflict, after a missile hit the Yara office building in Kyiv.

Fortunately, none of the employees were physically hurt.

“We are sourcing a considerable amount of essential raw materials from Russia, used for food production worldwide,” Mr Holsther stated.

“In addition to the immediate threat to life, and the gruesome sufferings that we are witnessing in Ukraine, few things are more important than access to food.

“While we can choose to delay consumption of most products and services, food is an essential good.”

Over the last two years, several external shocks, including climate change, the pandemic and increased European gas prices have exposed the weaknesses in the food system and the urgency for change.

“The World Bank highlighted that, even though the current food supply is stable, food prices increase in most countries in the world,” he added.

“In 2020, around 800 million people went hungry to bed, representing an increase of 120 million people from 2019.

“The war threatens to reinforce this development.”

Yara is both a provider of solutions to the agricultural sector in Ukraine, and a big buyer of raw materials from Russia.

Mr Holsther continued: “We always comply with current regulations, sanctions and our own guidelines.

“Free flow of goods across borders has been possible in a time with higher geopolitical stability. “Now, 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.”

He added: “A world with unstable food supply is a world with famine in parts of the world, increased mortality, armed conflict, migration, riots, and destabilised societies which can further accelerate geopolitical tensions.

“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.

“This constitutes a difficult dilemma between continuing sourcing from Russia on a short-term basis or cut off Russia from the international food chains.

“The last option may have considerable social consequences.

“These considerations are not to be taken by individual companies but need to be made by national and international authorities.

“The urgency now lies in helping Ukraine and the Ukrainian people.

“At the same time, we are pleading with Norwegian and international governments to get together and protect the global food production and work together to decrease dependency on Russia,” he ended.