Sanctions against Russia are prompting concerns over a coming food crisis.
On Friday, the Bloomberg Green Markets North America Fertilizer Price Index jumped almost 10% due to Russian sanctions, the highest increase on record.
CHART OF THE DAY: Fertilizer prices climb to a fresh record, as sales from Russia (one of the world's top producers) are disrupted, and super-expensive natural gas in Europe curtails output. The chart below is New Orleans urea price from 1977 to date | #OATT🌽🚜👩🌾🌾⚗️ pic.twitter.com/aWPw89LjCE
— Javier Blas (@JavierBlas) March 18, 2022
According to Bloomberg’s Green Markets, Russia accounted for almost one-fifth of 2021 fertilizer exports. Russia is also one of the world’s top exporters of essential fertilizer ingredients such as urea, ammonia, and potash, per Argus Media.
According to Bloomberg, the loss of the Russian fertilizer supply due to sanctions is likely to cause severe strain to crop nutrient supply. Before the war, the supply chain was under pressure as European fertilizer producers reduced output due to surging gas prices and rising freight costs.
On Friday, Svein Tore Holsether, the CEO of the large fertilizer producer Yara International, told the Wall Street Journal, “We are going to have a food crisis. It’s a question of how large.”
Norway-based Yara International announced last week that, due to EU sanctions, it would no longer be purchasing supplies from Russia.
Holsether told the Wall Street Journal that he was weighing a “moral dilemma” even before the sanctions were official. He said that eliminating Russian supplies would contribute to food inflation.
Others have also expressed concern about a food shortage resulting from the sanctions on Russian supplies.
“Replacing their volumes would take nearly half a decade at the very best, and in some cases prove nearly impossible as Russia is a large source of mineral deposits found in few other global locations,” said Alexis Maxwell, an analyst for Bloomberg’s Green Markets.
An Editorial Board article from the Washingon Post had the following to say about the worldwide food shortage resulting from a culmination of inflation and the ongoing conflict in Ukraine:
“Even before Russia launched a large-scale invasion of Ukraine, the year 2022 was on track to be one of sky-high food prices, food shortages and deep hunger in many parts of the world. Now, there is a massive humanitarian crisis in Ukraine, and the war’s impacts are reverberating around the globe. There is almost certainly not going to be enough food to feed the world this year. The situation is quickly becoming ‘catastrophic,’ with a high likelihood of famine in parts of the Middle East and Africa, warns the United Nations’ World Food Program.”