Michael Wurz

It's a great pleasure to be on.

Thank you so much.

The impact is complex, to say the least, because as you've mentioned, there is an impact on global fertilizer market.

About one third of fertilizer that is used globally is going through the Strait of Hormuz with countries like Iran, Qatar, Saudi Arabia and Oman being important producers.

This is relevant because about half of the food that is produced worldwide depends on fertilizer use.

Secondly, the energy prices are skyrocketing.

fertilizer production is extremely energy intensive so that increases the volatility of fertilizer prices even more and something that is not often looked at the countries that are more exposed to those increased food and fertilizer prices especially in africa and southeast asia are also countries that have a lot of labor migrants in the gulf regions millions of them and their remittances will go down the moment energy prices skyrocket the economic situation is more difficult

So it's a complex layered system that is interconnected where people all over the world within a few weeks will be impacted by the war in Iran.

The energy cost is more indirect.

As I mentioned, fertilizer is extremely energy intensive, but also energy prices are relevant because they impact agricultural supply chains because the cost for, for example, farm operations, irrigation, transport costs.

storage, food processing is all increasing.

And that's particularly important for a region like the Gulf and Northern Africa, where people are consuming very high levels of wheat produced carbohydrates, about 200 pounds a year per capita.

So that reason is extremely import dependent.

And so the increasing energy prices have cascading effects

that will result in higher bread prices this is particularly important for countries in northern africa egypt is exhibit a here where about half the population covers between 30 and 40 percent of their daily carbohydrate input their calorie input through bread and we remember still that during the arab spring uprising skyrocketing bread prices were a contributing factor to the political unrest

Yes, so the region produces a lot of the organic ingredients of fertilizer, especially for nitrogen fertilizers, which is mostly ammonia and urea.

That region is an important exporter, but also a lot of fertilizer transits through the region.

It's, as I mentioned, about one third of the global production.

Those interruptions are important.

They are not hitting markets immediately, but they obviously will be important soon.