Iran war may cause food shortages in Africa, world’s largest fertiliser firm says | Chemical industry

The head of the world’s largest fertilizer company has said the Iran war could have “dramatic consequences”, causing food shortages and price rises in some of Africa’s poorest and most vulnerable communities.

Svein Tore Holsether, CEO of Yara International, said world leaders must take action against rising prices and fertilizer shortages, which will lead to a de facto global auction, which will force the poorest countries, especially in Africa, to scramble for materials they cannot afford.

“The most important thing we can do right now is to raise the alarm about what we are seeing right now, which is that there is a risk that fertilizer will end up in a global auction, meaning fertilizer will become unaffordable for the most vulnerable,” he said.

“Africa is actually quite well positioned to be a major food producer, not just in terms of self-sufficiency but also in terms of exports to the rest of the world, but the reality is they are major food importers.

“But in this part of the world, we have to be aware of the potential consequences if we have a global food auction that there won’t be a famine in Europe, but we have to be aware of who we’re buying the food from.”

Yara International is a Norwegian multinational company with facilities in 60 countries and sales in 140 countries.

Holsether refrained from predicting actual food shortages in parts of Africa, but said he was in London to draw world leaders’ attention to the possibility of worsening shortages before action was taken.

“It’s important to get the message across about the danger of what could potentially happen before it’s too late,” he said.

Financial intelligence firm S&P Global said the impact of the war was already deepening in supply chains.

Chris Rogers, head of supply chain research at S&P Global Market Intelligence, said: “Food supply chains face both direct and indirect challenges from fuel and fertilizer constraints.

“Variability in Africa’s dependence on nitrogen fertilizers in the Middle East is quite high, with Ethiopia and Kenya being heavily exposed in sub-Saharan Africa.”

With 35% of the world’s supply of urea, a key ingredient in fertiliser, coming from Gulf countries, Yara has already seen supply chokes and the price of urea rising “between 60% and 70% since the US and Israel launched a war against Iran at the end of February”.

The price increases “have pretty dramatic consequences for those who can’t afford them,” Holsether said.

There is also the issue of compressed reserves and production.

“At some point you run out of inventory space,” Holsether said. “There is also a limit to the amount you can store in production facilities.”

In a double whammy, stocks of ammonia, the key raw material for nitrogen-based fertilizers, were also devastated by the war.

Ammonia is a toxic substance that can cause serious damage to the respiratory tract, and keeping inventory in war is so risky that some countries, such as Qatar, have suspended production entirely.

“We are losing production every day. It will be weeks or months before we can restart,” Holsether said of overall fertilizer production.

Fertilizer use during the upcoming planting season in sub-Saharan Africa is a challenge for local farmers, but then this summer they face the problem of building stocks for 2027 crops, a routine exercise in farm planning.

Holsether said the EU had already taken action to help farmers, but the same support should be given in sub-Saharan Africa. “We must treat farming as a commercial business”

Just this week the EU announced it would relax state subsidy rules for industries and give individual farmers grants of up to €50,000 (£43,200) for the extra cost of fuel or fertilizer caused by the Iran war. However, these supports are not available in Africa. They are also started from a point where soil health is compromised and food reserves are lacking.

“Soil conditions and agriculture in Europe are already quite optimized, so farmers can reduce fertilizer consumption somewhat without dramatic consequences on yield,” Holsether said.

“But it’s not the same in other parts of the world. You’re under-fertilising to begin with. The place I’m most worried about right now is Africa. Yet we’re in a situation where the most vulnerable will pay the highest price.”