Norwegian firm warns high gas prices could impact food production
Soaring prices for natural gas, a key feedstock for producing chemical fertilisers, will weigh on food production and security, a major Norwegian manufacturer warned Wednesday.
Norway-based Yara said that a near fifteenfold rise in European natural gas prices had forced it to reduce its production of ammonia, a key fertiliser component.
"European nitrogen production is essential to global food security, and we are therefore concerned about the impact current European natural gas prices will have, especially for the world's poorest regions," chief executive Svein Tore Holsether said in a statement.
As prices for fertilisers rise in the wake of those for natural gas, farmers will be tempted and perhaps forced to cut back on their use. As a consequence, production of food crops could drop.
Holsether pledged Yara will do its utmost to supply farmers and support global food production.
However, he said, "the current situation clearly demonstrates the need for more resilient food supply chains" and called on both government and industry to work together to secure the global food supply.
Rising prices helped Yara's results overall in the third quarter, with headline sales rising by 46 percent to nearly $4.5 billion.
Operating earnings also improved, but adverse currency effects and writing down the value of a phosphate mining project pushed the firm into a net loss of $143 million.
It earned a net profit of $340 million in the third quarter. Yara shares were up 1.5 percent in afternoon trading, while the main OBX index was up 1.4 percent.