Rising gas prices in Europe could cause fertilizer shortages, industry, analysts and UN warn

food crisis. Rising gas prices due to invasion of Ukraine threaten to cause a global shortage fertilizer which, in turn, will provoke rising food prices and hunger, warn industrialists, analysts and UN.

never them fertilizer synthesis called NPK — made from nitrogen, phosphorus or potassium1 were very expensive: the world price has tripled from early 2021 to mid-2022.

“The challenge of my job is to anticipate where they will be in the next 18 months,” he said. Joel Jacksongeneral manager and market analyst fertilizer in BMO Capital Marketsat a specialized conference in July in USA.

In Europe, fertilizer NPK is quoted at a “historic” level as it is indexed to the price of gas, which is 90% of the cost of production fertilizer Nitrogenous, such as ammonia or urea.

And this hydrocarbon continues to rise in price as Russia closes the valves of its gas pipelines to the rest of the world. Europe against the backdrop of the war in Ukraine.

paralyzed production

To maintain profitability, many European manufacturers fertilizer paralyzed the production of ammonia, obtained by combining nitrogen from air and hydrogen from natural gas. This hasn’t happened since 2008 financial crisis.

With gas almost 300 euros (300 dollars) megawatt hour “Compared to 20 euros on average over the past ten years”, “we have a big problem: it doesn’t work anymore for any of the ammonia producers because gas is 10 to 15 times more expensive than before,” he explains to AFP . Nicolas Brutinresponsible for the French subsidiary of the Norwegian manufacturer Yara, number one in Europe fertilizer nitrous.

In July, Yara paralyzed its factory in Ferrara, for the second time this year. Italy. French plant in spring Le Havre stopped production for three weeks. And since January, Yara has produced 15% less ammonia in Europe than last year, according to German bank.

This week, as gas prices continue to rise, the largest Polish producer nitrogens announced the suspension of ammonia production by 90%, and the first Lithuanian producer anemia He also announced that he would paralyze his factory from September 1st.

“The risk of a shortage if all Europe the stops are real, there may be a resource issue because we are producing fertilizer winter in anticipation of spring 2023,” adds Brutin.

Effects in 2023

Farmers may also lack potassium due to sanctions against Russia, one of the main producers, as well as against Belarusally Moscow and is “responsible for a sixth of the world’s potassium production,” says Joel Jackson.

Before the war Russia was the world’s largest exporter fertilizer NPK.

Person responsible for UNAntónio Guterres, defended that fertilizer and Russian agricultural products must be exempted from sanctions and must enter the world market “freely” in order to avoid a global food crisis in 2023.

Brazilagricultural power, the main supplier of which fertilizer this is Russia“We have already become aware of this dependence, which will put pressure on the agricultural campaign in 2023,” experts from the world guide to raw materials say. Cyclope.

Producers fear “artificial destruction of demand” if farmers ration or forego certain foods. fertilizer that have become unavailable, Jackson says. “You can see it all over Europe”, Bruten abounds.

“It is in 2023-2024 that the rise in prices for fertilizer and ultimately lower utilization,” adds CyclOpe, which expects a “significant reduction” in agricultural production in Africa.

On the world market for fertilizerthese violations, which are so far particularly felt in Europe they represent a business for other actors.

In order to do without Russian products, manufacturers from the end of 2021 are importing ammonia from North America or Australia, says Burtin.

Others see an opportunity for fertilizer organic, such as manure or derived from green hydrogen.

Meanwhile number one in the world fertilizerCanadian Nutrien is going to increase the production of potassium to compensate for the shortage in Russia or Belarus. Joel Jackson he expects the company to at least double its earnings this year.

(AFP)