Shutdowns in European nitrogen capacity, thanks to high gas costs, are “very risky” in enhancing reliance on Russia’s supplies of nutrients – and food – which the country is using a “weapon”, Yara warned.

Half of Europe’s production of nitrogen fertilizer capacity was mothballed as of the end of last month, equivalent to 15% of the world total, the Norwegian-based group said.

Yara’s own European division ran at 57% of capacity in the July-to-September quarter, as it “optimised” its operations in the face of gas costs nearly triple those of a year before.

The shutdowns, while beneficial for margins, were only increasing Russia’s grip on the fertilizer market, and thence food, when the country had already used its stranglehold on gas supplies to send Europe’s energy costs rocketing.

Yara termed Russia “a superpower in terms of not only energy production, but also food and fertilizer””.

‘Critical move’

“We are deeply concerned about the state of global agriculture,” Svein Tore Holsether, the Yara chief executive, told investors.

“To fight the escalating food prices that are happening as we speak, the world needs all the food and all the fertilizer at its disposal.

“It is critical for Europe to reduce our dependency on Russia – not only on energy, but also within fertilizer and food.”

‘Very risky’

Thor Glaever, the fertilizer giant’s chief financial officer, said that the “end result” of the shutdowns was that “we are moving towards even more need of Russian fertilizer.

“That is a very risky move… strengthening a weapon that he [President Putin] is using in war.

“Every four seconds a human being dies because of hunger in the world, which is completely unacceptable in October 2022.

“It is possible to solve this. But at the same time, we need to understand what kind of political risk we’re taking if we don’t build a resilient food system not dependent on Russia.”

‘Too dependent on Russia’

Mr Glaever added that the group was lobbying policymakers in an effort to boost local food security, reducing the requirement for imports from Russia, the top wheat exporter, and a major shipper of the likes of barley, corn and rye too.

“We need to ensure that food production is robust, and that it’s able to deliver food to a growing population also without Russia.”

This involves boosting Europe’s own energy generation capabilities, including of renewables.

“Europe had too much of its energy portfolio dependent on Russia,” he said, in comments which followed the release of Yara’s third-quarter results.

For analysis of Europe’s nitrogen price outlook, click here.