As the northern hemisphere’s planting season begins, Ukrainian farmer Igor Borisov may have ominously called it when he said, ‘You cannot build a forecast on Vladimir Putin’. As his fellow country folk swap seed packs for arms and tractors for tanks, the world is bracing for shortages of wheat, corn, and barley and sunflower seeds used for cooking oil (Ukraine currently produces half the world’s sunflower oil). 🌾 But running out of oil to sizzle your Friday fish ‘n’ chips is the least of impending global food woes.
Western sanctions on Russia have stymied shipping trade with the warring nation, and the Russian government has recommended the country halts all exports of fertilisers and the raw materials used to make them: potash, phosphate and nitrogen. That’s 13% of the world’s total supply, worth US$7 billion in 2020. While interim CEO of Canadian company Nutrien (NTR) Ken Seitz says they could pump up their potash production to meet increased demand, he warns it’s a balancing act, adding, ‘That's the line that we're trying to walk this year’. Yet despite rising oil prices hiking up transportation costs, there’s been a surge of investor interest in fertiliser makers outside Russia - Nutrien, Adecoagro (AGRO), Mosaic Co (MOS) and CF Industries Holdings (CF) all have seen a significant upswing since the Russian invasion on 24 February.
But Agco chief executive Eric Hansotia says hunger runs deeper than empty bellies. 🌽 ‘This is a really big deal,’ he warns, ‘because when that volume of calories comes out of the food chain, it triggers other things. Not only hunger but unrest’. He cites the last major food supply disruption as a potential trigger for the Arab Spring.
In the US, wheat production has been declining since its 2008 peak, and while American agriculture could accelerate, if the war disappears as quickly as it appeared, economist Scott Irwin cautions that farmers could be left ‘holding the bag’. 🧑🌾 But weathering storms is nothing new for US farmers, who have John Deere (DE) in their sights as their movement for their Right to Repair turns farmers into hackers. 🚜