The head of one of the world’s largest fertilizer companies has said global food supplies could be severely damaged this year if the Iran war turns into an extended conflict.
Svein Tore Holsether, chief executive of Norway’s Yara International, has called on world leaders to consider the impact skyrocketing food prices will have on some of the world’s poorest countries “before it is too late”.
He said: “Given the importance of fertilizers, this is something that can seriously affect crop yields if the war continues for a prolonged period.
“This is a regional conflict with global implications and goes directly to the food system.”
The cost of fertilizer raw materials has soared since the war began two weeks ago, as a third of the world’s urea and about a quarter of globally traded ammonia, which are key components of the plant nutrient, come from the Gulf.
Urea prices have increased by around $210 per ton, rising from $487 per ton the week before the Iran attack to $700 now.
Holsether said: “If the Strait of Hormuz were closed for a year, it would be catastrophic. We are talking about nutrition for the plants, and if they don’t get the nutrition, you will see significant reductions in agricultural yields.”
“For some crops, if they don’t receive the fertilizer, you can see a reduction of up to 50% in the first harvest,” he added, referring to European summer crops, including early potatoes.
Founded in Norway in 1905 to combat European famine, Yara is the world’s largest producer of nitrogen-based mineral fertilizers and has plants in the Netherlands, France, Germany, but also in India and South America.
Holsether said the fertilizer industry had been hit by “a double whammy”: disruption to raw material supplies from the Gulf; and the price of gas, necessary to capture nitrogen from the air, skyrockets.
He said production in Qatar and Iran had been reduced as a direct impact of the war, while some governments in Asia had ordered gas rationing.
“When gas prices rise as much as they do now, it goes directly to the cost of producing fertilizer for everyone,” Holsether said.
He said Europe would always be able to outbid poorer countries, raising concerns about its neighbors in Africa and beyond. “The most vulnerable countries continue to pay the highest price.
“In a global fertilizer auction, Europe will have greater purchasing power than the poorest parts of the world, we must take into account the magnitude of this before it is too late,” he added.
The UN World Food Program has said rising food and fuel prices driven by the escalating conflict in the Middle East could have ripple effects that will worsen hunger for vulnerable populations in the region and beyond.
