War In Ukraine Creates Fertilizer Shortage, Causing Spike In Global Food Prices — Could Organic-Based Fertilizers Help?

Photo by David Vives on Unsplash

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The Russia-Ukraine conflict has created a disruption in almost all critical sectors of the economy, including energy and food.

Markets Mayhem?

The war caused a spike in oil and gas prices globally. Earlier this year, oil jumped to $139 per barrel, a record high for the past 14 years, while wholesale gas prices for next-day delivery more than doubled. With little progress toward resolving the conflict, the price for Brent oil is expected to reach $140 per barrel in the second quarter, according to Ehsan Khoman,  MUFG Bank Ltd.’s director of emerging markets for Europe, the Middle East and Africa.

The turmoil continues to affect financial markets. In the first week of March, the Financial Times Stock Exchange (FTSE) suffered its worst week when it fell by more than 6%, wiping about $170 billion (£133 billion) off the value of the 100 largest firms on the London Stock Exchange (LSE), its biggest slip since 2020. On April 7, the FTSE closed 0.5% lower following Shell plc’s SHEL SHEL decision to exit Russia.

Tension In The Global Supply Chain

The conflict also has disrupted the global supply chain in agriculture. Russia and Ukraine are among the largest producers in the agriculture and food sectors, and Russia is a major supplier of raw materials for fertilizer such as potash. The decrease in potash — a crucial ingredient in fertilizer — has caused a strain on fertilizer production across the globe.

“Half the world’s population gets food as a result of fertilizers … and if that’s removed from the field for some crops, the yield will drop by 50%,”, said Svein Tore Holsether, president and CEO of Yara International ASA YARIY, a Norwegian chemical company operating in more than 50 countries.

Speaking to the BBC, Tore said his company, which imports most of its raw materials from Russia, is finding it difficult to secure deliveries because of the disruption in the shipping industry. Just hours after Tore’s interview, the Russian government sent an order to producers to halt fertilizer exports. 

Russia’s call comes a week after Ukraine suspended fertilizer exports. The suspensions are already increasing pressure on fertilizer prices. 

According to analysts, the move by the two countries could cause higher costs for farmers and lower crop yields, causing a surge in food prices. On the other hand, the current potash crisis could present a growth opportunity for companies focused on alternatives like SusGlobal Energy Corp. SNRG, which develops organic fertilizer.

SusGlobal is a renewable energy company focused on converting organic waste into valuable products such as biogas, liquid fertilizer and compost. These products can then be sold as fuel, electricity or for fertilizer use in agriculture.

SusGro, SusGlobal’s Flag-Bearer

SusGlobal is the developer of an organic liquid fertilizer called SusGro, which the company says is capable of helping plants grow big and strong without the need for certain fertilizer additives and ingredients.

According to SusGlobal, SusGro is a pathogen-free liquid fertilizer product that can provide farmers an economical, sustainable and effective alternative to traditional chemical fertilizers. SusGro provides micronutrients including sulfur, iron and calcium, critical for plant growth, and a high concentration of organic matter, which helps improve physical soil properties such as water retention, soil texture and soil tilt.

SusGlobal thinks that SusGro could make it immune from the supply chain disruption because it doesn’t have to worry about potash, a product the company doesn’t use. Time will tell if organic alternatives like SusGro fill in the gaps to smooth market activity.

This post contains sponsored advertising content. This content is for informational purposes only and is not intended to be investing advice.