The boss of one of the world’s largest fertiliser companies has said global food supplies could be badly damaged this year if the Iran war becomes an extended conflict.
Svein Tore Holsether, the chief executive of Norway’s Yara International, has called on global leaders to consider the impact that soaring food prices will have in some of the world’s poorest countries “before it is too late”.
He said: “Given the importance of fertiliser, this is something that can seriously impact crop yields if the war continues for an extended period.
“This is a regional conflict with global implications and it goes straight into the food system.”
The cost of the raw materials in fertilisers has rocketed since the war started two weeks ago as a third of the world’s urea and about a quarter of globally traded ammonia, which are key components in the plant nutrient, comes from the Gulf.
Prices of urea have increased by about $210 a tonne, rising from $487 a tonne the week before the attack on Iran to $700 now.
Holsether said: “If the strait of Hormuz was closed for a year it would be catastrophic. We are talking nutrition for plants, and if they don’t get the nutrition, then you will see significant reductions in the farm yield.”
“For some crops, if they don’t get the fertiliser, you can see a reduction of up to 50% in the first harvest,” he added, referring to European summer crops including early potatoes.
Established in Norway in 1905 to combat European famine, Yara is the world’s largest producer of nitrogen-based mineral fertilisers and has plants in the Netherlands, France, Germany but also India and South America.
Holsether said the fertiliser industry had been hit by “a double impact”: supplies of raw materials from the Gulf being choked off; and the price of gas, needed to capture nitrogen from the air, rocketing.
He said production in Qatar and Iran had been reduced as a direct impact of the war, while some governments in Asia had ordered rationing of gas.
“When gas prices increase as much as they do now, it goes straight to the cost of producing fertiliser for all,” Holsether said.
He said Europe would always be able to outbid poorer countries, raising concerns about neighbours in Africa and beyond. “The countries that are most vulnerable still pay the highest price.
“In a global auction for fertiliser, Europe will have a stronger buying power than poorer parts of the world, we need to keep in mind the magnitude of this before it is too late,” he added.
The UN World Food Programme has said rising food and fuel prices driven by the escalation of the conflict in the Middle East could have ripple effects that will worsen hunger for vulnerable populations in the region and beyond.
