“Full blast”—Yara CEO says there is only one way to respond to the crisis in the Gulf: do everything better
· Fortune
“You never want a serious crisis go to waste,” Rahm Emanuel famously told his boss, Barack Obama, in 2008. The president’s chief-of-staff was referring to the financial crisis. Today, that same advice could apply to the Iran conflict.
Visit asg-reflektory.pl for more information.
The uneasy truce in the Gulf has given business leaders a chance to take stock. If trade starts flowing once again through the Strait of Hormuz, inflation risk will recede. The ebullience of the markets, hardly tempered as rockets flew and bombs exploded, will continue, probably with even more vigor. Those exposed to the conflict—oil producers, high-energy-use firms, and anyone who relies on global supply chains—will see a degree of normality return.
Yara International is one of them. The $12bn market cap firm produces 8% of all the world’s fertilizer. Without fertilizer, food production would collapse. The Strait is one of the most important supply routes for the world’s nitrogen-providing products. Yara is also the biggest consumer of gas in Europe. When the energy price spikes, investors start worrying about the bottom line.
“The Strait of Hormuz is the most important shipping channel for the export of urea fertilizer in the world,” Yara chief executive, Svein Tore Holsether, tells me. “About one-third of traded or exported urea fertilizer goes through the Strait and there is significant production in that region. Iran is a big producer.”
“Every day that passes, fertilizer is not being produced, and there’s limited inventory capabilities also—so ships are full. That means that products are not finding their way to the market.”
For Yara—#300 on the Fortune 500 Europe list—downside risks may appear insurmountable. The opposite is true. Last month, it announced quarterly profits of $896m, beating forecasts. Shares rose 4% as the price of urea (a central component of the fertilizer Yara sells) hit levels not seen since Russia’s full-scale invasion of Ukraine in 2022.
“When everyone knows that half of the food produced in the world is a direct result of fertilizer, then you know how important it is to do the work every day and with all the disruptions that we’ve been through—whether it’s COVID or Russia’s war in Ukraine, the energy crisis now, or the conflict in the Middle East,” Holsether says.
“We’re making sure that we’re running our plants at full blast. We’re proud to see that we set an all-time high production record last year.”
New technology and the ‘artificial intelligence layer’ can help. Yara is growing rapidly in the bio-stimulants market, specialized products that support plant yields and climate change resilience in crops. When geopolitical risk increases, achieving “full blast” on the elements of your business you can control, or improve, becomes more important. The ‘fourth agricultural revolution’ is upon us.
“We’re in that era right now, driven by technology and AI,” Holsether says. “If you think about the complexity of being a farmer—they are working out in nature where there are so many variables—it’s the weather patterns, it’s floods and droughts and heat and cold spells, soil health, water scarcity, all of that comes together to create a very complex set of parameters.”
“But with AI, there is the ability to take all that into consideration and then help the farmers to make the right decisions on how to fertilize, what crops, when to fertilize, tailoring the products to the specific needs of soil health.”
Farming is as much about big tech and mobile apps helping you micro-dose fields as it is about muddy boots. We all rely on the system not breaking down, whatever global leaders might do with bombs and bullets. “We’re making technology available to farmers to get the most out of every nutrient you can, so we have tools to help farmers optimize what they apply in the field in order to maximize crop yields given the cost of fertilizer,” Holsether says. When politics goes awry and food supply is at risk, business ingenuity often has to fill the gaps.
This story was originally featured on Fortune.com