Yara boss Svein Tore Holsether warns of an upcoming food crisis.
Fertilizer giant Yara is one of the major industrial buyers of natural gas, an input factor that has seen prices multiply in the last year. Prices for natural gas have risen so high that Yara and several other fertilizer manufacturers have been forced to reduce production. This in turn has led to rising prices for fertilizers and food.
Svein Tore Holsether, CEO of Yara, warns in an interview with Finansavisen TV about the food crisis he now sees coming, thanks to the enormous pressure in the commodity markets which gives increased prices for the world’s farmers.
“There are farmers in parts of the world who are struggling to afford important input factors for producing food,” said Holsether.
“If you do not get nitrogen fertilizer on the soil, a grain crop will fall by 50 per cent already in the first year. So you could go from an energy crisis to a food crisis here,” said the Yara boss to Finansavisen.
Record-high gas prices in Europe affect margins for ammonia producers, and as a result of Yara, CF Industries and BASF in mid-September, decided to limit their production at several plants. Yara alone has cut around 40 per cent of the company’s European ammonia production capacity.
Reduced production of fertilizers will affect crops and the availability of a wide range of agricultural products. This will also affect meat production and fish farming, which are dependent on feed raw materials.
The biggest input factor, and cost component, in fish farming is feed. According to Mowi, vegetable raw materials make up 79 per cent of the company’s feed.