National Emergency Supply Agency: Finland has no shortage of fuels or grain because of the war in the Middle East

Finland’s security of supply has not been weakened by the war in the Middle East. The availability of fuels and grain is good in Finland, but the availability of fertilisers must be improved in the future, states the National Emergency Supply Agency in its latest assessment. The Agency is monitoring the situation in the Middle East and anticipating its impacts on Finland’s security of supply in collaboration with companies and other authorities.

The impacts of the Iran war on security of supply have so far manifested as mild problems in the ability of companies to operate due to rising prices for fuels, raw materials and supplies. If the war drags on, the possibility of real supply problems will increase, for example for certain raw materials.

The origin of oil does not protect Finland from rising oil prices

There is no fuel shortage in Finland, as Finland’s crude oil and gas come from the North Sea. The capacity of the Neste fuel refinery in Finland to produce various fuel products from crude oil is significantly higher than Finland’s total fuel needs. However, the prices of oil products are also rising in Finland, as crude oil is priced on the international market.

No problems with the availability of jet fuel are anticipated in the coming months in Finland. As regards individual airlines, the situation depends largely on the agreements and cost-price hedges that they have in place.

Finland has at least five months’ worth of fuels in compulsory and emergency stockpiles. This is a high amount by international standards, so Finland is well prepared even for significant supply problems.

Finland’s electricity production is largely independent of fossil fuels. Even if the crisis were to continue for a long time, it will not have a significant direct impact on electricity prices in Finland.

If the conflict drags on, its indirect impacts will accumulate and affect Finland as well. The prices of manufacturing raw materials will rise, transport costs will become more expensive, delays in global supply chains will increase and overall inflation may increase. These impacts will also result in higher consumer prices.

The Middle East is a key producer of plastic raw materials also for Finland. Because of this, disruptions in the availability of plastic raw materials could affect food supply in the coming months. Demand for alternative raw material suppliers is currently high and Finland is a small market. In particular, the prices of raw materials for plastic food packaging have risen significantly as a result.

Finland is self-sufficient in terms of grain production

The disruptions in the Strait of Hormuz could also have a significant impact on the supply of raw materials for the chemical industry. This could reduce the availability of fertilisers and plant protection products, for example, and raise prices, with repercussions for global grain production.

Finland’s food system is 80% self-sufficient, and the country’s food grain production has been fully self-sufficient for a long time. Based on the current assessment, no sudden and significant changes in the availability of food grain are expected. In Finland, farms have already procured most of the fertilisers needed for the upcoming growth season.

If the war in the Middle East drags on, the ensuing rise in fertiliser and fuel prices will lead to additional costs for farmers. This would likely decrease the use of fertilisers in agriculture, in addition to which the area under cultivation might shrink and crop yields would be reduced. The development of the situation needs to be anticipated in the coming harvest seasons.

Finland’s state emergency stockpiles contain a total amount of food grain equivalent to 9 months of regular consumption. The current grain stockpiles would be sufficient to cover a partial reduction in domestic grain production for a considerable length of time.

From a security of supply perspective, there are certain areas of food supply where preparedness needs to be improved in Finland. These include the crisis resilience and back-up systems of the water supply sector, the supply of domestic vegetable protein and the reliability of grocery shops in the event of disruptions.

In agriculture, the availability of critical inputs (fertilisers, plant protection products) needs to be strengthened to ensure that Finland remains sufficiently self-sufficient even in a protracted crisis.