This could devastate farmers.
The world’s largest chemical company is cutting the production of a key ingredient in fertilizer, potentially causing ramifications for farmers and the global food supply.
The German firm BASF announced they’re cutting back on production of ammonia in a Wednesday media call after an earnings report, according to Reuters.
The company is citing Germany’s precarious energy situation as a result of Russia’s war on Ukraine.
Germany is highly dependent on Russia for natural gas, which is necessary in large quantities for the operation of ammonia plants.
Ammonia is a vital ingredient in the manufacturing of fertilizer and many plastics.
Fertilizer is commonly used to prepare soil for agriculture.
BASF CEO Martin Brudermüller admitted that farmers stand to pay a greater price for ammonia as a result of the company’s decision in the media call.
The company is looking to purchase some ammonia from international suppliers, and may accept compensation from the German government through a tentative program to ration gas use in the country.
The increased costs are likely to pass down to consumers at markets across Europe, and by extension, the world.
Two other companies that produce ammonia in Germany, SKW Piesteritz and Ineos, declined to rule out production cuts to the vital chemical as a result of the natural gas shortage.
Russian state-owned companies are continuing to supply natural gas to Germany and Europe, but tensions over the war have spurred disputes capping the supply.
Germany lacks permanent port terminals that enable the transit of gas shipped from around the world.
The nation’s government instead opted for pipelines directly from Russia, saving money while leaving the nation’s energy supply dependent on President Vladimir Putin’s dictatorship.
If Germany had liquefied natural gas port terminals, it would be much easier to replace the supply from Russian pipelines with American and Gulf Arab gas delivered by sea.
Russia’s war on Ukraine has harmed global food security in other ways.
Russia blockaded off the exportation of Ukrainian grain until reaching a deal permitting Ukraine to move grain out of the Black Sea earlier this month, according to NPR.
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