Fertiliser giant warns Iran war could trigger global food crisis

The war involving Iran could have “dramatic consequences” for global food security, potentially triggering shortages and price increases that would hit some of Africa’s poorest and most vulnerable communities, the head of the world’s largest fertiliser producer has warned.

Svein Tore Holsether, chief executive of Yara International, said there is a growing risk that rising fertiliser prices and supply disruptions could lead to what he described as a de facto global auction, in which poorer countries would struggle to secure essential supplies.

“The most important thing we can do now is raise the alarm on what we are seeing right now – that there is a risk of a global auction on fertiliser that means it becomes unaffordable for those most vulnerable,” he said.

Holsether noted that while Africa has strong potential to become a major food producer, including for export markets, many countries on the continent remain heavily dependent on food imports.

“Africa is actually quite well positioned to be a major food producer, not only for self-sufficiency, but even for exports to the rest of the world, but the reality is that they are massive food importers,” he said.

He warned that if global competition for food intensifies, the impact will be unevenly distributed.

“But we need to be aware in this part of the world of the potential consequences that if we get to a global auction on food, there will not be a famine in Europe, but we need to be aware of who we are taking the food away from.”

Yara International, a Norwegian multinational with production facilities in 60 countries and sales in 140, has already observed tightening supply conditions. Holsether said he stopped short of predicting outright food shortages in Africa but travelled to London to alert policymakers to the risks of the situation escalating if no action is taken.

“It is important to communicate the message about the danger of what potentially could happen before it is too late,” he said.

According to S&P Global, the war’s impact is already rippling through supply chains. Chris Rogers, head of supply chain research at S&P Global Market Intelligence, said: “Food supply chains face both direct and indirect challenges from fuel and fertiliser restrictions.”

He added that African countries vary significantly in their dependence on fertiliser imports from the Middle East, with some facing greater exposure than others.

“The variability in Africa’s dependence on Middle East nitrogenous fertilisers is high, with Ethiopia and Kenya heavily exposed in sub-Saharan Africa.”

The pressure on fertiliser markets is particularly acute given that about 35% of global urea supply — a key fertiliser component — comes from Gulf states. Yara has already seen supply constraints intensify, with urea prices rising by between “60% and 70% since the US and Israel launched their war on Iran at the end of February”.

Holsether said such increases carry serious implications.

“The increase in price has some rather dramatic consequences for those that cannot afford them,” he said.

He also highlighted logistical and production constraints affecting supply.

“At some point you run out of inventory space,” said Holsether. “And there’s a limit to how much you can store within the production plants.”

By Tamilla Hasanova