“People will starve and die”
Fertilizers. The head of one of the largest fertilizer manufacturers, Samir Brikho, warns of even more expensive food and famine in Africa – and sees the reason in the unclear EU policy
By Richard Grasl
In addition to the supply crisis for gas and oil, the war in the Ukraine has also brought turbulence to other sectors. Fertilizers are particularly affected because a large part of the production of the ingredients comes from Russia. Samir Brikho, the head of EuroChem, one of Europe’s largest fertilizer companies, believes that the EU’s unclear sanctions policy toward Russia is to blame.
KURIER: After almost a year of war in Ukraine, what is your forecast for the fertilizer market in 2023?
Samir Brikho: Prices will continue to rise sharply. The strategic reserves are almost exhausted, we have to fill them up and additionally cover the annual demand in 2023. Farmers will have to pay more. Together with higher energy costs, this will lead to massive price increases for food, and in the worst case, security of supply will be jeopardized.
Is Putin using fertilizers as a strategic weapon, like natural gas?
I cannot answer geopolitical questions. What is clear, however, is that fertilizers, unlike energy, make up only a small part of Russian state revenues. What we note is that the EU has made unclear regulations as far as sanktioning is concerned. Although fertilizers were exempted in the 9th Sanctions Pact, it is up to the member states to decide. In addition, there are some prerequisites that make the package virtually unusable. Since some are on the brakes, banks, insurance companies are pulling out. But we need them for transportation. That drives the price up sharply.
The EU is responsible?
On paper, it tries hard to ensure that the delivery works. But in reality, things look different. In Estonia, a terminal for the export of ammonia to the EU is at a standstill, and in Lithuania the transport of Russian goods is not permitted, not even for non-sanctioned companies or products that are critical for the food supply. It is understandable that the Baltic states are particularly critical of Russia, but the result is threatening.
So what should EU agriculture ministers do at this weekend’s meeting in Berlin?
We need clarity on the supply chains from Russia. Everyone needs to be encouraged to help and not stop the free movement of goods. There needs to be an economic view of things, not a political one. Fertilizers, after all, don’t understand politics. If you use them, you get grain; if you don’t, you get much, much less.
Rich countries may be able to manage inflation, but what does the global price increase mean for poorer countries, such as in Africa?
Many there simply cannot afford a fertilizer price that is twice as high. Production will fall, people will starve or die. This will also endanger political stability in these countries.
In the case of gas, the West has managed to quickly find alternatives to Russian supplies. Can this also be done in the short term for fertilizers?
First, we can reduce consumption of oil and gas, use renewable energies, and keep nuclear power plants running longer. We can’t do that with fertilizers. Second, Russia has the locational advantage of cheap gas. Since the price increase, ammonia plants have been closed in Europe, for example. Even before the war, we had just enough capacity to feed the world’s population. If something goes away, it won’t be enough, not least because the global population is rising sharply.
The founder of EuroChem is the Russian billionaire Andrey Melnichenko. Although he withdrew from the company after the war began and called for an end to the war, he is still on the EU’s list of donors. Aren’t you also representing the interests of a Russian oligarch close to Putin?
No. Melnichenko is not an oligarch because he has never bought state assets or sold them to the state. He is a self-made millionaire and is not close to Putin. He was the founder of EuroChem, but he is not the owner. The company is owned by a trust run by three lawyers, and has been for almost twenty years. Its headquarters have been in Switzerland since 2012. When the war started, we saw that there was a risk to the company from his being on the board, so he left. The chairman of the trust is the former head of Interpol in the U.S., Ron Noble, so probably a very good gatekeeper.
Can be believed, but also not …
… Some European countries have even commissioned auditors who have come to the conclusion that EuroChem is not controlled by Melnichenkos. You see, we are an international company, without influence from Russia.