Live on Bloomberg TV

00:00WE HAVE SEEN HIGH FERTILIZER PRICES AND THAT IS SOMETHING WE HAVE TALKED ABOUT. HOW SUSTAINABLE DO YOU THINK THOSE PRICES ARE GIVEN THE FACT THAT AT SOME POINT YOUR CUSTOMERS START TO PUSH BACK AGAINST THOSE HIGH PRICES? SVEIN: THERE HAS BEEN SIGNIFICANT VOLATILITY THAN THE WHOLE SYSTEM IN THE LAST COUPLE OF YEARS. AND INCREASING THROUGH LAST SUMMER, WE INCREASED ENERGY PRICES BECAUSE FOOD IS ALSO ENERGY. IT ' S TAKES ENERGY TO PRODUCE CROPS, IT TAKES ENERGY TO SUPPORT FARMERS IN GROWING THOSE CROPS. NOW WITH THE WAR IN UKRAINE, THERE ARE SIGNIFICANT DISRUPTIONS TO THE WHOLE FOOD CHAIN, NOT ONLY ON THE SUPPLY OF FOOD, BUT ALSO ON ALL KEY NUTRIENTS. THIS IS DRIVING UP COST PRICES AND THE IMPORTANCE OF FERTILIZER IN PARTICULAR TO GROW FOOD. THE DEMAND IS GROWING UP AT THE TIME, AND THAT PRICES ALSO BEING DISRUPTED. ALL IN ALL, THERE HAS BEEN A LOT OF DISRUPTION IN OUR INDUSTRY. ANNA: A LOT OF DISRUPTION. ONE OF THE THINGS THAT HAS DISRUPTED YOUR BUSINESS HAS BEEN HIGHER GAS PRICES. YOU HAD TO TURN OFF SOME OF YOUR OPERATIONS, I UNDERSTAND, BACK IN MARCH, TEMPORARILY SHUT DOWN SOME FACILITIES IN MARCH. CAN YOU BE COMPETENT -- CONFIDENT THAT THAT ' S DOES NOT HAPPEN TO YOU LATER THIS YEAR OR CAN WE NOT HAVE THAT CONFIDENCE? SVEIN: I DON ' T THINK ANYONE CAN HAVE THAT KIND OF CONFIDENCE IN THIS ENVIRONMENT WHERE WE SEE GAS PRICES FLUCTUATING. THIS IS MORE THAN WHAT WE PAID FOR GAS LAST YEAR. THIS IS ABOUT HAVING A ROBUST PRODUCTION SYSTEM AND THIS IS HAVING AN EFFECT ON OUR GLOBAL STRUCTURE. BEING ONE OF THE LARGEST PRODUCERS OF THE WORLD AND THE LARGEST TRADER OF AMMONIA AND USING THAT MODEL TO SHIP FROM OTHER PARTS OF THE WORLD TO EUROPE TO RETAIN FOOD PRODUCTION, WE ARE ABLE TO KEEP PRODUCTION AT ALMOST FULL CAPACITY IS IN FIRST QUARTER, BUT WITH GAS PRICES IN THE BEGINNING OF MARCH PASSING $100 AN OIL BARREL, THE EQUIVALENT OF $600, IT IS DIFFICULT TO GET ANY PRODUCTION GOING AT THESE PRICES. AGAIN TRYING TO MAXIMIZE PRODUCTION IN A VOLATILE OPERATING ENVIRONMENT. ANNA: I KNOW YOU HAVE SOME OPERATIONS IN UKRAINE AND YOU SUPPLY MARKETS ALL OVER THE WORLD. THE SALES OFFICE THAT YOU OPERATE WAS ACTUALLY HIT BY RUSSIAN ATTACKS EARLIER ON IN THE CONFLICT. I ASSUME YOU MAY HAVE PEOPLE THERE. WHAT ' S DO YOU UNDERSTAND IS THE STATUS OF UKRAINIAN AGRICULTURE MORE GENERALLY ABOUT WHAT IS BEING PLANTED? SVEIN: IT IS DEVASTATING, WHAT IS HAPPENING IN UKRAINE. IT IS A HUMANITARIAN CATASTROPHE. THE STORIES WE ARE HEARING FROM OUR COLLEAGUES, THE PICTURES WE SEE ON TV OF CORPSES, IT IS DIFFICULT TO FIND THE RIGHT WORDS TO DESCRIBE HOW DIFFICULT THIS IS. YET IS -- I AM INCREDIBLY PROUD AND ENCOURAGED BY WHAT WE HAVE SEEN FROM UKRAINE AND HOW THEY ARE WORKING DAY AND NIGHT TO SUPPORT UKRAINIAN FARMERS WHO HAVE BEEN ABLE TO MOVE 150 TRUCK LOADS OF FERTILIZER INTO UKRAINE. OUR COLLEAGUES ARE WORKING DIRECTLY WITH THE FARMERS IS IN THE FIELDS. WHERE USING DIGITAL TOOLS -- WE ARE USING DIGITAL TOOLS TO HELP FARMERS OPTIMIZE THE APPLICATION OF FERTILIZER TO MAXIMIZE THEIR CROPS GIVEN THE PRICES. IT IS STILL SHORT OF WHERE WE SHOULD BE. WE SEE PICTURES OF FARMERS WITH BULLETPROOF VESTS AND WE HAVE MINDS ON THE FIELDS OF THE FARMERS, BUT THERE IS A LOT OF UNCERTAINTY AT THE MOMENT. STILL, IF THEY ARE ABLE TO GROW THE CROPS, IT WILL BE POSSIBLE TO MOVE THE CROPS OUT OF UKRAINE, THAT IS A LOT OF CONCERN. BUT I AM PROUD OF OUR TEAM. ANNA: AND WE HAVE ACCESS TO THE DATA WERE MOVING CROPS BECOMES DIFFICULT. THE VULNERABILITY OF GLOBAL FOOD CHAINS HAVE BEEN HIGHLIGHTED BY THE COVID PANDEMIC AND CERTAINLY BY WAR IN EUROPE. YOU HAVE BEEN CALLING FOR MORE ROBUST DEVELOPMENT ON THE GLOBAL SUPPLY CHAIN AND CALLING ON THE EU AND OTHERS TO DO MORE. WHAT IS THE MOST IMPORTANT THING YOU WOULD LIKE TO SEE HAPPEN? SVEIN: I THINK WE HAVE TO RETHINK THE WHOLE FOOD SYSTEM. IT HAS BEEN BUILT OVER DECADES, A VERY GLOBAL SYSTEM WHERE IT MAKES MORE SENSE TO HAVE THE CROPS AND IT IS ALL BASED ON STABILITY, BUT THAT HAS BEEN CHALLENGED NOW IS IN THE LAST FEW MONTHS WITH SIGNIFICANT DISRUPTIONS. WE ARE SEEING HOW THAT IS CAUSING MUCH HIGHER FOOD PRICES, SHORTAGES OF INPUT, AND ALSO HOW MUCH THE WHOLE WORLD FOOD SYSTEM RELIES ON RUSSIA. THAT NEEDS TO BE REDEFINED WITH MUCH MORE RANGE OF MODELS TO AVOID THESE KINDS OF DISRUPTIONS AND MAKE SURE WE GET A FOOD SUPPLY. IT IS VERY IMPORTANT TO GET THAT OUT TO THE MOST VULNERABLE AS WELL AS THE PEOPLE HARDEST HIT BY COVID, THOSE HARDEST HIT BY CLIMATE CHANGE. WE ALSO SEE AN INCREASE IN FOOD PRICES AS WELL. WE WOULD ALSO LIKE TO MAKE A CALL FOR FUNDING TO THE WORLD FOOD PROGRAM TO SUPPORT THE ONES THAT ARE REALLY IN A CHALLENGING POSITION. ANNA: ONE WAY I SUPPOSE WE CAN THINK ABOUT ROBUSTNESS OF FOOD SUPPLY IS TO THINK ABOUT RELIANCE ON FOSSIL FUELS. YOU HAVE BEEN WORKING ON GREEN AMMONIA PRODUCTS. IS THERE ENOUGH DEMAND FOR GREEN AMMONIA PRODUCTS IN THE AGRICULTURAL SECTOR RIGHT NOW? IN THE AGRICULTURAL SECTOR, DO YOU SEE ENOUGH DEMAND TO WARRANT EMPHASIS ON THAT PRODUCT AT THIS DISRUPTIVE TIME? SVEIN: IT HAS TO COME BECAUSE IF YOU LOOK AT THE GLOBAL FOOD SYSTEM, WE ACCOUNT FOR 25 PERCENT OF GREENHOUSE GAS EMISSIONS AND IT IS NOT POSSIBLE TO REACH THIS LEVEL WITH AGRICULTURE AS WELL. THE INPUT IS IMPORTANT AND WE PLAN TO REDUCE OUR OMISSIONS -- EMISSIONS BY 25% IN THE COMING YEARS. THE FIRST THING WE CAN DO IS TO REDUCE THE EMISSIONS. THE OTHER PART IS TO CONVERT THE AMMONIA INDUSTRY FROM USING NATURAL GAS TO RENEWABLE ENERGY. WE DO SEE RELIANCE ON NATURAL GAS FROM RUSSIA. WE MADE THE FIRST STEP ALREADY WITH OUR DEMONSTRATION PUMP. WE WILL HAVE PRODUCTS AVAILABLE NEXT YEAR ALREADY AND THAT WILL DEFINED OUR FIRST CONTRACT, BUT THE ENTIRE FOOD SYSTEM ALSO NEEDS TO DO WHATEVER IT CAN TO REDUCE THE USE OF FOSSIL FUELS. THIS IS A SIGNIFICANT STEP IN THAT DIRECTION.

No schedule data available.

Yara CEO on Food Supply Disruptions, Gas Price Impact

Yara International ASA Chief Executive Officer Svein Tore Holsether discusses food supply chain disruptions and the impact of higher gas prices. The CEO told Bloomberg's Anna Edwards we need "much more regional models to avoid these kinds of disruptions." He speaks on "Bloomberg Markets: Europe." (Source: Bloomberg)

More From Bloomberg Markets
All episodes and clips