Yara to supply PepsiCo with reduced-carbon ferts

Norwegian fertilizer producer Yara has signed an agreement to supply global food and beverage manufacturer PepsiCo with 165,000 t/yr of fertilizer using feedstock from Yara's renewable and CCS ammonia production projects.

The agreement stipulates Yara will work towards supplying PepsiCo with fertilizer products exclusively from Yara's ‘Climate Choice fertilizers' range by 2030. The length and start date of the supply agreement were not disclosed.

Yara's Climate Choice fertilizers range will include nitrate fertilizer products which are produced using ammonia from the company's 20,000t/yr renewable ammonia plant in Porsgrunn. The plant began commissioning earlier this year. The range will also include products using ammonia feedstock from Yara's carbon capture and sequestration (CCS) production project at Sluiskill, which is expected to begin CCS operations in 2026. The range also includes Yara's premium nitrate-based fertilizer products, with which newer catalyst technology results in carbon footprint reductions when compared to older production plants. The carbon footprint of the ammonia feedstock will vary dependent on these production pathways. Porsgrunn ammonia can produce nitrate mineral fertilizers with a 70-90pc carbon reduction when compared to fossil-fuel natural gas production pathways.

Argus estimates nitrate fertilizers require 0.26-0.43t ammonia per tonne of nitrate product on average (see table). The ammonia consumption rate varies on the nitrate product concerned, and whether it is technical or fertilizer grade. Argus estimates Yara's supply agreement with PepsiCo could equate to a requirement of around 43,000-71,000t of ammonia.

Yara has signed similar agreements with other agriculture companies within Europe. In January the company signed an agreement with Nordic grocery chain Reitan Retail, Norwegian agriculture co-operative Felleskjopet Agri and Norwegian milling group Norgesmollene, to supply the consortium with nitrate-based fertilizer products with a reduced carbon footprint.

And in 2023 Yara signed a similar agreement with German flour producer Bindewald, Gutting Milling Group and German bakery Harry Brot.

Pricing structures for the agreements have so far not been disclosed, but the producer is expecting a premium for the low-carbon attributes of its finished fertilizers, especially once the EU's Carbon Border Adjustment Mechanism (CBAM) becomes operational in 2026.

Once CBAM is applied, the increased cost for more carbon-intensive products will determine the achievable premium for lower-carbon nitrate fertilizer, the company expects.

By Lizzy Lancaster