Yara International ASA reported on March 1 that on the morning of Feb. 26 a missile hit the building of the Yara Ukraine office in the country’s capital Kyiv, but none of the company’s employees had been physically harmed, and all were accounted for.
Noting that Russia and Ukraine are world powers in a global and fragile food system, Yara President and CEO Svein Tore Holsether said it is essential to reduce the dependency on Russia.
The CEO warned about the long-term consequences of the war in Ukraine on global food supply, which will impact both the rich and the poor parts of the world.
“We are extremely concerned about the grave situation which is now unfolding in Ukraine and stand fully behind the Norwegian government’s condemnation of the Russian military invasion. At the same time, we are sourcing a considerable amount of essential raw materials from Russia, used for food production worldwide,” he said.
Holsether highlighted Ukraine is one of the world’s leading agricultural nations and the world’s second biggest within grains. He said Ukraine’s farmers are now entering a crucial stage in the agricultural season in which input factors such as fertilizer, seeds, and water will determine the yield of the coming harvest.
“The most extreme calculations indicate that if fertilizer is not added to the soil, the crops can be reduced by 50 percent by the next harvest,” warned the CEO.
He also noted that Russia is one of the largest producers of wheat, and has enormous resources in terms of fertilizer nutrients, as well as supplying 40 percent of Europe’s natural gas.
Holsether said Yara is both “a provider of solutions to the agricultural sector in Ukraine and a big buyer of raw materials from Russia,” and that the company “always complies with current regulations, sanctions, and its own guidelines.
“Free flow of goods across borders has been possible in a time with higher geopolitical stability. Now, with the geopolitical conditions out of balance, the biggest sources of raw material to Europe’s food production are being subject to limitations, and there are no short-term alternatives,” the CEO warned, adding that one potential consequence is that “only the most privileged part of the world population gets access to enough food.”
Holsether noted that while higher food and fertilizer prices may positively impact Yara’s bottom line in the short-term, long-term value creation for private companies can only be achieved through a sustainable food system with food being affordable and accessible to the world population.
“A world with unstable food supply is a world with famine in parts of the world, increased mortality, armed conflict, migration, riots, and destabilized societies, which can further accelerate geopolitical tensions,” said Holsether.
“It is therefore crucial that the international community come together and work to secure world food production and reduce dependency on Russia, even though the number of alternatives today is limited.
“This constitutes a difficult dilemma between continuing sourcing from Russia on a short-term basis or cut off Russia from the international food chains,” the CEO said, adding that the last option may have “considerable” social consequences. He believes these considerations are not to be taken by individual companies but need to be made by national and international authorities.
“The urgency now lies in helping Ukraine and the Ukrainian people. At the same time, we are pleading for the Norwegian and international governments to get together and protect the global food production and work together to decrease dependency on Russia,” said the CEO.