Obtain the data you need to make the most informed decisions by accessing our extensive portfolio of information, analytics, and expertise. Sign in to the product or service center of your choice.
Bayer is assessing the repercussions from the Russia-Ukraine
conflict on the company's prospects and its threat to global food
security, with chief executive officer Werner Baumann noting that
the firm is working to mitigate business risks arising from the
situation. He estimates the contribution of Ukraine and Russia to
Bayer's consolidated revenues at less than one percent, and around
two percent, respectively.
Mr Baumann highlights that over half of the company's 700
employees in Ukraine belong to its Crop Science division comprising
crop protection and seeds, which has "largely completed" seed
production and distribution for the March-April planting season.
However, he rates the situation on the ground as "dramatic", with
"import bottlenecks" being created by a lack of transport and
logistics capacities. Furthermore, he observes that an ongoing
grain crisis set afoot by the Covid-19 pandemic, inclement weather,
and weak harvests in Africa and Latin America has been
"dramatically exacerbated" by Russia's invasion of Ukraine.
The executive feels that the crisis has been worsened by some
countries deciding to retain their grain reserves, "rather than
efficiently managing it through international co-operation at a
global level". He anticipates the situation worsening if
governments and companies fail to undertake "co-ordinated and
concerted efforts" to address the challenges.
Mr Baumann also augurs the trend leading to surging grain prices
in Europe, North Africa, and the Middle East, noting that the
phenomenon is a "social time bomb" that could affect peace in the
absence of guaranteed food security. While he expects the company
to tide over the risks posed by the conflict, he is apprehensive
about the business being affected by secondary and tertiary factors
such as energy supply and energy prices.
Non-essential services suspended
Following the Russian offensive, Bayer has suspended
"non-essential" services in Russia and Belarus, including the
suspension of all spending in these markets that is not related to
supplying essential products in health and agriculture. Those
include: suspending all advertising and other promotional
activities; halting capital investment projects indefinitely; and
not pursuing any new business opportunities. The company adds that
withholding crucial health and agriculture products from the
civilian populations including seeds to grow food would "only
multiply the war's ongoing toll on human life". Furthermore, Bayer
says that it will monitor the situation and that any developments
could lead it to change its response.
Some other agribusiness companies, including agriculture
businesses, have since suspended operations in the belligerent
countries.
Bayer notes that it has already provided essential agricultural
inputs to farmers in Russia to alleviate additional pressure on the
global food system. "We will closely monitor the political
situation and decide about supplies for 2023 and beyond at a later
stage, depending on Russia stopping its unprovoked attacks on
Ukraine and returning to a path of international diplomacy and
peace," it says.
The company cites a recent G7 Agriculture Ministers' statement
on the invasion of Ukraine. The Ministers made clear that any
increase in food price levels and volatility in international
markets could threaten food security and nutrition at a global
scale and would especially affect the most vulnerable, the company
notes. By supplying farmers around the globe, Bayer wants to
protect food supply chains from further disruption and help prevent
what could become an unprecedented food crisis, it adds.
Aid for staff
Bayer is providing its staff in Ukraine with financial aid,
shelter, and evacuation assistance. It has also established a €3
million ($3.4 million) "disaster relief fund" and other healthcare
product dona1tions for up to 27,000 Ukrainian patients.
{"items" : [
{"name":"share","enabled":true,"desc":"<strong>Share</strong>","mobdesc":"Share","options":[ {"name":"facebook","url":"https://www.facebook.com/sharer.php?u=http%3a%2f%2fihsmarkit.com%2fresearch-analysis%2fbayer-working-on-mitigating-business-risks-from-russiaukraine-.html","enabled":true},{"name":"twitter","url":"https://twitter.com/intent/tweet?url=http%3a%2f%2fihsmarkit.com%2fresearch-analysis%2fbayer-working-on-mitigating-business-risks-from-russiaukraine-.html&text=Bayer+working+on+mitigating+business+risks+from+Russia-Ukraine+conflict+%7c+IHS+Markit+","enabled":true},{"name":"linkedin","url":"https://www.linkedin.com/sharing/share-offsite/?url=http%3a%2f%2fihsmarkit.com%2fresearch-analysis%2fbayer-working-on-mitigating-business-risks-from-russiaukraine-.html","enabled":true},{"name":"email","url":"?subject=Bayer working on mitigating business risks from Russia-Ukraine conflict | IHS Markit &body=http%3a%2f%2fihsmarkit.com%2fresearch-analysis%2fbayer-working-on-mitigating-business-risks-from-russiaukraine-.html","enabled":true},{"name":"whatsapp","url":"https://api.whatsapp.com/send?text=Bayer+working+on+mitigating+business+risks+from+Russia-Ukraine+conflict+%7c+IHS+Markit+ http%3a%2f%2fihsmarkit.com%2fresearch-analysis%2fbayer-working-on-mitigating-business-risks-from-russiaukraine-.html","enabled":true}]}, {"name":"rtt","enabled":true,"mobdesc":"Top"}
]}