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‘I’m afraid we’re going to have a food crisis’: The energy crunch has made fertilizer too expensive to produce, says Yara CEO
‘I’m afraid we’re going to have a food crisis’: The energy crunch has made fertilizer too expensive to produce, says Yara CEO
“I want to say this loud and clear right now, that we risk a very low crop in the next harvest,” said Svein Tore Holsether, the CEO and president of the Oslo-based company. “I’m afraid we’re going to have a food crisis.”
Speaking to Fortune on the sidelines of the COP26 climate conference in Glasgow, Holsether said that the sharp rise in energy prices this summer and autumn had already resulted in fertilizer prices roughly tripling.
“To produce a ton of ammonia last summer was $110,” said Holsether. “And now it’s $1,000. So it’s just incredible.”
Food prices have also risen, meaning some farmers can afford more expensive fertilizer. But Holsether argues many smallholder farmers can’t afford the higher costs, which will reduce what they can produce and diminish crop sizes. That in turn will hurt food security in vulnerable regions at a time when access to food is already under threat from the COVID-19 pandemic and climate change, including widespread drought.
The company, whose largest shareholder is the Norwegian government, has donated $25 million worth of fertilizer to vulnerable farmers, Holsether said. But Yara isn’t able to eat the costs of such a dramatic rise in energy prices, he says…
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The Exxons of agriculture
Credit: Pawel Kuczynski (http://www.pawelkuczynski.com).
Read the media release about this report here
It goes without saying that oil and coal companies should not have a seat at the policy table for decisions on climate change. Their profits depend on business-as-usual and they’ll do everything in their power to undermine meaningful action.
But what about fertiliser companies? They are essentially the oil companies of the food world: the products they get farmers to pump into the soil are the largest source of emissions from farming.1 They, too, have their fortunes wrapped in agribusiness-as-usual and the expanded development of cheap sources of energy, like shale gas.*
Exxon and BP must envy the ease their fertiliser counterparts have had in infiltrating the climate change policy arena. World leaders are about to converge for the 21st Conference of the Parties (COP21) in Paris in December, but there is only one major intergovernmental initiative that has emerged to deal with climate change and agriculture – and it is controlled by the world’s largest fertiliser companies.
The Global Alliance for Climate Smart Agriculture, launched last year at the United Nations (UN) Summit on Climate Change in New York, is the culmination of several years of efforts by the fertiliser lobby to block meaningful action on agriculture and climate change. Of the Alliance’s 29 non-governmental founding members, there are three fertiliser industry lobby groups, two of the world’s largest fertiliser companies (Yara of Norway and Mosaic of the US), and a handful of organisations working directly with fertiliser companies on climate change programmes. Today, 60% of the private sector members of the Alliance still come from the fertiliser industry.2
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