Lack of supply from Russia, the risk of food shortage covers Europe

Risk of food shortage

According to foreign experts, the supply chain disruption due to the crisis Ukraine can lead to fertilizer shortages and reduced crop yields. In particular, this opinion is shared by the head of chemical group Bayer AG, Matthias Berninger.

“Next year, we face one of the greatest food crises in human history,” said Berninger.

World hunger may affect around 100 million people. The head of the United Nations World Food Program David Beasley predicts that food shortages could lead to large-scale migration.

Italian Prime Minister Mario Draghi also has similar concerns, according to him, the food crisis will affect, first of all, Africa and the Middle East.

“There is a serious risk that higher prices, combined with reduced fertilizer production, will cause a food crisis,” he said in a speech to the European Parliament in Strasbourg.

The head of the Italian Cabinet noted that in March, the basic food price index reached a historic high, and according to the United Nations Food Organization (FAO), the number of hungry people in the world between 2022 and 2020. 2026 could increase by 13 million people. As of 2021, 193 million people in 53 countries face food insecurity, according to the FAO, 40 million more than in 2020.

The World Bank also predicts that food prices will increase sharply and fertilizer prices will increase by 70% this year.

“Overall, this is the biggest price shock we’ve experienced since the 1970s. Today’s shock is exacerbated by the sharp increase in restrictions on trade in food and fuel. and fertilizers,” said World Bank Vice President Indermit Gill.

One of the reasons for the rise in food prices is fertilizer, which makes up a significant portion of the cost of grains, meat, vegetables, and more. In the past six years, in the United States, the prices of major mineral fertilizers have increased fivefold.

Supply disruption from Russia

For European countries, mineral fertilizers supplied from Russia and Belarus are of particular importance. At the same time, the production of nitrogen fertilizer as an alternative requires gas, while rising gas prices make nitrogen fertilizer production in Europe almost impossible.

According to FAO estimates, Russia is the leading exporter of nitrogenous fertilizers, the second largest supplier of potassium fertilizers and the third largest supplier of phosphorus fertilizers. And although the export quota of mineral fertilizers was slightly increased by the Russian government after the restrictions were introduced, this is unlikely to solve the problem of foreign farmers.

European politicians also seem to be unaware of what problems they are causing. According to Bloomberg, as part of the sixth package of sanctions, they propose to impose restrictions on Belaruskali, Belarus’ main potash producer and the export arm of Belarus Potash Co. In Ukraine, they decided to seize 33,000 tons of mineral fertilizers from Russian and Belarusian enterprises.

Currently, the world produces 190 million tons of fertilizers with active ingredients. The leading countries in production, in addition to Russia and Belarus, are the US, India, Japan, Egypt, Nigeria, Saudi Arabia, Algeria, Canada, Indonesia.

In terms of fertilizer consumption, leading the world are China, the US, Brazil and other developed countries with crop production. Without fertilizers, this agricultural direction would be inefficient and high-quality products would not be obtained.

Now there will be a struggle between the great powers to become the biggest agricultural producers. Depending on the outcome who – China, USA, India – will become the largest producer and will determine the prices for the whole world.

More than 3 million tons of active fertilizers were purchased from Russia by the US and China. However, disruptions to the supply chain have significantly affected the planting season. To supply 5 million tons of active ingredients, 12 tons of matter by weight must be transported to specific agricultural production facilities.

Europe’s dependence on fertilizers from Russia is quite high. A large amount of mineral fertilizers are purchased by Europe. Seeding in Europe is underway but there is not enough fertilizer. This year, the situation developed like that made gas price increased rapidly, and large amounts of gas are needed to produce nitrogenous fertilizers. Many factories have stopped production so mineral fertilizers will not be added. Imports from Russia will decrease, and this will affect crop yields.