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Why Putin's War in Ukraine Is Going to Start Hitting Your Wallet

This is flying under the radar.
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There is more than one way to wage war and Norwegian chemical conglomerate Yara is accusing Russia of weaponizing its spot in the food supply chain as part of its war with Ukraine.

The war has caused supply chain issues by driving up the price of natural gas, which is key to fertilizer production. This in turn has caused global fertilizer prices to hit record levels, leading farmers to raise their prices, Yara told the BBC at the World Economic Forum in Davos, Switzerland. 

"Putin has weaponized energy and they're weaponizing food as well," Svein Tore Holsether of Yara told the BBC. "It's the saying, 'fool me once, shame on you. Fool me twice, shame on me.'"

Dr. Peter Alexander, a professor at Edinburgh University who was interviewed by the BBC, said that "this could be the end of an era of cheap food."

Fertilizer Domino Effect 

Global food prices could jump by 74% from 2021 levels if fertilizer prices remain this high, and could lead to one million additional deaths and 100 million people being undernourished, according to Dr. Alexander. 

Russia is the top exporter of fertilizers in the world, but U.S. imports of Russian urea fell by 42% between January and October 2022 despite the fact that the U.S. hasn't placed sanctions on Russian nitrogen imports. 

"Russia is the world's largest exporter of fertilizer, so it will have global implications. We've seen some of that from the disruptions already and there is a need for Russian fertilizer in order to maintain global food production," Holsether said.

Fertilizer and other input expenses are projected to account for 49% of total operating costs for corn farmers in 2023, according to Gro's U.S. Farmer Profitability and Crop Budgets study

Corn, of course, is used in most of the animal feed in America, so increased corn prices will definitely have a cascading effect of food prices throughout the grocery store.