The specter of a global fertilizer crisis is beginning to loom in Europe as gas prices rise.

The United Nations, industry workers and fertilizer market analysts have suggested that shortages of basic fertilizers, of which Russia is a major source, will cause a significant rise in food prices next year and therefore therefore, hunger.

Global prices for NPK chemical fertilizers (N for Nitrogen, P for Phosphorus and K for Potassium) tripled between early 2021 and mid-2022 for the first time of their kind.

“The difficulty of my job is predicting where prices are going to be in the next 18 months,” Joel Jackson, a fertilizer market analyst and CEO of BMO Capital Markets, told an analyst conference in the United States in July.

In Europe, NPK fertilizer prices reached a “historic” level because they are linked to gas prices, since the latter constitute 90% of the production costs of nitrogenous fertilizers such as ammonia and urea. However, natural gas prices continue to rise as Russia cuts gas supplies to Europe, which supports Ukraine.

To preserve their profits, many European fertilizer makers have stopped production of ammonia, which is made by combining nitrogen from the air with hydrogen from natural gas. This interruption of ammonia production has not occurred since the financial crisis of 2008.

Nicolas Protan, head of the French branch of the Norwegian company “Yara” for the manufacture of nitrogenous fertilizers, said during an interview with Agence France-Presse that the price of a megawatt-hour of gas has now exceeded 300 euros, after of was set at “20 euros in the last ten years” is “a big problem”.

“Ammonia manufacturers can no longer afford it, because the price of gas is 10 or 15 times more expensive than before,” he added.

Yara announced on Thursday that it will reduce its ammonia production in Europe due to gas prices, thus using less than 35% of its production capacity in Europe.

The company had suspended, for the same reasons, twice since the beginning of the year, the operation of its Ferrari factory in Italy, and suspended production for three weeks at the Le Havre plant in France. Thus, Yara’s production will be reduced by 3.1 million tons of ammonia and 4 million tons of finished products.

Polish fertilizer manufacturer Azoty announced this week that it would suspend 90% of its ammonia production, and Lithuania’s leading company, Achema, announced that it would suspend operation of its plant on September 1.

In Hungary, Nitrogenmuvek also closed, and the Borealis Grandpuits plant in France will stop operations in September and October, according to an Argus Research publication.

“The risk of shortages that can cause the stoppage of production throughout Europe is a real danger, and there may be a problem with resources because fertilizers are made in winter before spring 2023,” Brotan added.

And farmers may lack potash due to sanctions imposed on Russia, one of its main producers, in addition to sanctions against Belarus, “which is responsible for a sixth of the world’s potash production,” according to Jules Jackson.

Before the start of the war in Ukraine, Russia was the world’s largest exporter of NPK chemical fertilizers.

United Nations Secretary-General Antonio Guterres said Russian fertilizers and agricultural materials are not affected by sanctions and can easily reach global markets “without any barriers”, warning of a global food crisis in 2023 if achieves stability in the fertilizer market in 2022. .

Experts from the CyclOpe institute, which analyzes the global markets for raw materials and commodities, pointed out that Brazil, an agricultural power that has Russia as its main supplier of fertilizers, “made its adoption, which will affect the 2023 agricultural campaign.”

Protan says manufacturers are so afraid of “artificial demand destruction” that they fear rationing or having to stop using some fertilizers that have become too expensive, “which is starting to show across Europe.”

“The increase in fertilizer prices and the reduction in their use will be noticed in 2023 and 2024,” added the Cyclobe experts, who expect a “significant decrease” in agricultural production in Africa.

However, these disturbances, concentrated mainly in Europe, suit some.

From the end of 2021, European producers began importing ammonia from North America or Australia, according to Protan, to replace Russian gas. Some see this as an advantage over organic or “green hydrogen” fertilizers.

Meanwhile, Canada’s Nutrien, the world’s number one fertilizer producer, will increase its potash production to offset any potential shortages on the Russian or Belarusian side. Jules Jackson expects Nutrian’s earnings to double this year.