Russian President Vladimir Putin is “weaponising food”, and the impact is being felt around the world, the boss of one of the world’s biggest fertilizer firms warned, stressing that countries needed to cut their reliance on Russia after its invasion of Ukraine hit global food supplies and prices.
Svein Tore Holsether, from Yara International, told the BBC at the start of the World Economic Forum in Davos that “Putin has weaponised energy and they’re weaponising food as well.”
The warning comes as the world, especially the poor and developing countries like Pakistan, are witnessing alarming rise in food inflation. This trend is hitting the low-income groups badly notwithstanding in which country or region they live.
“It’s the saying, ‘fool me once, shame on you. Fool me twice, shame on me’,” said Holsether who is the president and CEO of Yara – a Norwegian company that produces, distributes, and sells nitrogen, phosphate and potash fertilizers and related industrial products.
Russia is a top exporter of fertilizers and chemicals used to make them. But the war has caused supply issues and driven up the price of natural gas, which is key to fertilizer production.
As a result, global fertilizer prices have hit record levels and forced farmers to raise food prices, putting pressure on consumers worldwide.
The warning echoes concern from the International Monetary Fund whose MD Kristalina Georgieva said the world should “move attention today to fertilizers, because this is where we see particular threat for food production and therefore food prices in 2023”.
“Fertilizer 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,” said Georgieva who added that high fertilizer prices were a threat to food production.
Russia stockpiled fertilizer for domestic use last year. While its exports declined, the record prices paid for fertilizer led to a 70 percent increase in export revenues, according to the UN Food and Agriculture Organisation.
Moscow increased exports to countries such as India and Turkey. Russia also produces enormous amounts of nutrients, like potash and phosphate – key ingredients in fertilizers, which enable plants and crops to grow.
Holsether called this dependency a powerful weapon. “With energy we’ve built an infrastructure in Europe on cheap Russian gas and we see the consequences and the cost of that right now with food and fertilizer.”
He pointed out that half of the world’s food production is dependent on fertilizer. “If you see significant disruptions on that, that’s a very powerful weapon.”
Impacts are already visible
Last week economists reported that sharp increases in fertilizer costs could lower food production yields so much that by the end of the decade, an increase in agricultural land equivalent to “the size of much of Western Europe” would be required to meet demand globally.
This would mean “severe impacts” for deforestation, biodiversity and carbon emissions, they added, according to the BBC.
Dr Peter Alexander of the School of Geosciences at Edinburgh University said: “This could be the end of an era of cheap food. While almost everyone will feel the effects of that on their weekly shop, it’s the poorest people in society, who may already struggle to afford enough healthy food, who will be hit hardest.
“While fertilizer prices are coming down from the peaks of earlier this year, they remain high and this may still feed through to continued high food price inflation in 2023.”
Sustained high fertilizer prices could increase food prices by 74 percent from 2021 levels by the end of this year, the study calculated, raising fears of “up to one million additional deaths and more than 100 million people undernourished if high fertilizer prices continue”.
Holsether warned that the impact of all of this is being felt around the world. “Russia is the world’s largest exporter of fertilizer, so it will have global implications. We’ve seen some of that from the disruptions already and there is a need for Russian fertilizer in order to maintain global food production,” he said.
“But my message here is that we also need to think about the next phase to reduce, to avoid the dependency on Russia. Because when that is being used as a weapon in war, we cannot go back to how it used to be.”