Diminished food supply resulting from Russia’s invasion of Ukraine has potential consequences beyond empty stomachs, Agco chief executive Eric Hansotia told CNBC’s Jim Cramer on Thursday.
According to Hansotia, about “13% of the global calories came out of production” when Russian and Ukrainian borders shut down.
“This is a really big deal, because when that volume of calories comes out of the food chain, it triggers other things. Not only hunger, but unrest. The last time we had this kind of disruption, it was one of the major triggers for the Arab Spring,” he said in an interview on “Mad Money,” referring to the pro-democracy protests that took place in the Middle East and North Africa in the early 2010s.
The Russia-Ukraine war has put pressure on farmers globally to produce more crop to make up for a gap in supply left by the two countries. As prices of wheat rise, so do prices of fuel and fertilizer that drive 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 agriculture stocks, with Agco earning a spot on the list.
Hansotia said that Agco is prioritizing helping farmers increase their crop without exhausting their limited supply or making purchases that could eat into their profits. He added that the company’s investment into technology firms like Apex.AI and Greeneye Technology, as well as its acquisition of Appareo Systems has helped in this mission.
As for the agriculture company’s business operations in Russia and Ukraine, the chief executive said that the company has prioritized the safety of its employees and dealers.
“We moved a lot of them out to the safer part of the country or across the border. Hundreds, in fact, have been part of that process,” he said, adding that the company tracks the employees and provides funds for them.
Another priority is “helping the farmers in that area stay productive,” Hansotia said. Agco has also helped provide housing for displaced Ukrainians and made donations to assist refugees, he added.
Agco stock rose 1.34% on Thursday.
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