Yara International CEO on scaling fertilizer manufacturing in Africa

The global fertilizer industry has been facing challenges due to supply chain disruptions after the Ukraine conflict and the Covid-19 pandemic, leaving Africa particularly vulnerable to soaring fertilizer prices. As the continent heavily relies on imported fertilizers, the weaknesses in the supply chains have had a direct impact on farmers. Amidst this crisis, the question of manufacturing fertilizers on African soil has become increasingly significant. CNBC Africa's Ridhima Shukla discussed the reality of investing in fertilizer manufacturing in Africa with Svein Holsether, the CEO of Yara International. The conversation highlighted the need for a balanced approach to address the current challenges while also planning for the future. While importing fertilizers may currently be cost-effective due to lower prices, it does not offer a sustainable solution in the long run. Holsether emphasized the importance of viewing agriculture as a significant business opportunity in Africa, with a $50 billion import bill for food that is projected to double by 2030. This presents an opportunity to create businesses locally, including the production of fertilizers domestically. However, this transition requires a comprehensive strategy that considers logistics, financing, and regulatory frameworks. Climate change and soil degradation are additional factors that need to be integrated into the discussion around fertilizer manufacturing. Holsether highlighted the impact of climate change on farmers in Kenya, where inadequate fertilizer management led to crop losses during droughts and floods. By focusing on soil health and using the right fertilizers, farmers can improve resilience to climate change, increase yields, and produce more nutritious food. This underscores the importance of sustainable soil management practices within the fertilizer industry. The concept of green fertilizers emerged as a key focus area for the future of fertilizer production. Yara International recently transitioned part of its production to green fertilizer, utilizing renewable energy sources such as electrolyzers to produce green ammonia. This shift towards green fertilizers aligns with the global decarbonization efforts in the fertilizer industry and the broader food system. Holsether emphasized the potential of utilizing solar power and other renewable energy sources for fertilizer production in Africa, highlighting the role of innovation in driving sustainable solutions. When considering the cost-effectiveness of sustainable fertilizer solutions, Holsether acknowledged the upfront costs involved. While these solutions may initially seem more expensive, taking a holistic view that considers the overall impact on food costs and emissions is essential. He drew a parallel with the coffee industry, where a minimal fraction of the retail price reaches the farmers. By prioritizing support for farmers and adopting sustainable practices across the food system, achieving the Sustainable Development Goals (SDGs) by 2030 becomes feasible. In conclusion, investing in fertilizer manufacturing in Africa presents both challenges and opportunities for sustainable growth. By addressing supply chain vulnerabilities, integrating climate-smart practices, and transitioning towards green fertilizers, the industry can contribute to a more resilient and environmentally conscious agricultural sector in Africa. Embracing innovation and collaboration will be crucial in shaping the future of fertilizer production on the continent.