The reduced food supply as a result of Russia’s invasion of Ukraine has potential consequences beyond empty stomachs, Agco CEO Eric Hansotia told CNBC’s Jim Cramer on Thursday.
According to Hansotia, about “13% of the world’s calories went out of production” when the Russian and Ukrainian borders closed.
“It’s a really big deal because when that amount of calories come off the food chain, it triggers other things. Not only hunger, but also restlessness. The last time we had this kind of disruption, it was one of the main triggers for the Arab Spring,” he said in an interview with Mad Money, referring to the pro-democracy protests that raged in the early 2010s Middle East and North Africa.
The war between Russia and Ukraine has pressured farmers worldwide to produce more crops to fill the supply gap left by the two countries. As wheat prices rise, so do fuel and fertilizer prices, driving up costs for farmers.
Cramer warned earlier this week that wheat and corn futures would continue to rise and urged investors to invest in a basket of agricultural stocks, with Agco earning a place on the list.
Hansotia said Agco prioritizes helping farmers increase their harvest without depleting their limited supplies or making purchases that could eat away at their profits. He added that the company’s investments in tech companies like Apex.AI and Greeneye Technology, as well as the acquisition of Appareo Systems, have helped with this mission.
Referring to the agricultural company’s operations in Russia and Ukraine, the CEO said that the company prioritized the safety of its employees and traders.
“We have moved many of them to the safer part of the country or across the border. In fact, hundreds were part of this process,” he said, adding that the company is tracking employees and providing funds for them.
Another priority is to “help the farmers in this area remain productive,” Hansotia said. Agco also helped provide housing for displaced Ukrainians and made donations to refugees, he added.
Agco shares rose 1.34% on Thursday.
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