Norway fertiliser giant warns EU gas price hike can lead to 'famine' due to food inflation

One of Europe's largest natural gas and fertilizer firm Yara International ASA on Wednesday warned that the skyrocketing fuel and gas prices in Europe might plummet worldwide agricultural production, causing widespread global famine in the vulnerable countries. In its third-quarter report released on Oct. 20, the President and Chief Executive Officer of Yara, Svein Tore Holsether, stated that the surge in the gas prices across Europe has led to curtailing of around 40% of European ammonia production. "European nitrogen production is essential to global food security,” he warned, adding that this situation elevates concerns about the impact the current European natural gas prices will have on the world’s poorest regions where prices disrupt food production. 

“The current situation clearly demonstrates the need for more resilient food supply chains,” Norway based fertilizer and natural gas company Yara said in its third quaterly report. The international organizations and food value chain players must “work together to secure global food supply,” said the CEO Svein Tore Holsether. 

'Collective action needed immediately' says Yara CEO 

Further cautioning about the looming global food crisis, Yara stated that urgent collective action was needed immediately to control the high gas costs worldwide, which was now in the recovery mode from the global COVID-19 pandemic. The company, which has its facilities across more than 50 countries, imports ammonia from countries where gas prices are considerably cheaper. Analyzing the current price hike situation, which he said had gripped the world, CEO Holsether warned: “It is important to get the message across that the energy crisis now could be the start of a food crisis.” “We have to pay special attention to everyone affected by higher utility and food prices, but for some, it is a question of living or not. This is about scenarios of famine and food scarcity,” he went on to add in the report. 

Fertilizer prices to hit all-time high levels in 2022 worsening food inflation

According to the Norway based firm, the global prices for the fertilizer urea, a key ingredient for food production and farming had spiked in prices to a whopping $850 (£615) from $260 in 2020. This month, the Fertilizer Index broke the record and is expected to approach all-time high levels in 2022. “Higher commodity prices, labour shortages, the COVID situation and overall strong demand for corn and soybeans right now are leading to where we are at currently,” Farm Management Specialist Gary Schnitkey with the University of Illinois said in a statement to US-based Agrarian outlet  Brownfield. The urea prices were 11% more expensive than the prior month as per the index and the nitrogen fertilizer had an average price of $620/ton crossing the threshold of nine years, spurring fears of global crisis due to worsening food inflation.