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Supply Chain

World 'Faces Food Crisis' Due To Ukraine War, Russian Billionaire Says

A global food crisis looms unless the war in Ukraine is stopped because fertiliser prices are soaring so fast that many farmers can no longer afford soil nutrients, Russian coal and fertiliser billionaire Andrei Melnichenko has said.

Several of Russia's richest businessmen have publicly called for peace since President Vladimir Putin ordered the invasion on February 24, including Mikhail Fridman, Pyotr Aven and Oleg Deripaska.

Sanctions On Russian Businessmen

The West has sanctioned Russian businessmen, including European Union sanctions on Melnichenko, frozen state assets and cut off much of the Russian corporate sector from the global economy in an attempt to force Putin to change course.

"The events in Ukraine are truly tragic. We urgently need peace," Melnichenko, 50, who is Russian but was born in Belarus and has a Ukrainian mother, told Reuters in a statement emailed by his spokesman.

"One of the victims of this crisis will be agriculture and food," said Melnichenko, who founded EuroChem, Russia's largest ammonium nitrate producer, which is based in Zug, Switzerland, and SUEK, Russia's top coal producer.

Food Prices Set To Rise

Putin warned on Thursday that food prices would rise globally due to soaring fertiliser prices if the West created problems for Russia's export of fertilisers - which account for 13% of world output.

Russia is a major producer of potash, phosphate and nitrogen containing fertilisers - major crop and soil nutrients. EuroChem, which produces nitrogen, phosphates and potash, says it is one of the world's top five fertiliser companies.

The war "has already led to soaring prices in fertilisers which are no longer affordable to farmers," Melnichenko said.

He said food supply chains already disrupted by COVID were now even more distressed. 

"Now it will lead to even higher food inflation in Europe and likely food shortages in the world’s poorest countries," he said.

Russia's trade and industry ministry told the country's fertiliser producers to temporarily halt exports earlier this month.

Melnichenko's fortune in 2021 was estimated by Forbes to be $18 billion, making him Russia's eighth richest man.

The European Union on Wednesday sanctioned Melnichenko for Russia's invasion. It said his attendance at a Kremlin meeting with Putin and 36 businessmen organised by the Russian Union of Industrialists and Entrepreneurs showed he was "one of the leading businesspersons involved in economic sectors."

'No Political Affiliations'

Melnichenko "has no relation to the tragic events in Ukraine. He has no political affiliations," his spokesman said.

"To draw a parallel between attending a meeting through membership in a business council, just as dozens of business people from both Russia and Europe have done in the past, and undermining or threatening a country is absurd and nonsensical," the spokesman said, adding Melnichenko will dispute the sanctions.

On March 9, Melnichenko resigned as member of the board and non-executive director in both EuroChem and SUEK, and withdrew as their beneficiary, the spokesman said.

Italian police last week seized Melnichenko's yacht - the 143-metre Sailing Yacht A - which has a price tag of €530 million.

News by Reuters, edited by ESM – your source for the latest Supply Chain news. Click subscribe to sign up to ESM: European Supermarket Magazine.

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