`European Commission Proposes Eliminating Tariffs on Fertilizer Ingredients - Olive Oil Times

European Commission Proposes Eliminating Tariffs on Fertilizer Ingredients

Jul. 25, 2022
Daniel Dawson

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The European Commission has pro­posed drop­ping tar­iffs on two crit­i­cal ingre­di­ents used to man­u­fac­ture nitro­gen fer­til­iz­ers in an effort to reduce pro­duc­tion costs for the continent’s farm­ers.

According to Chemanalyst, a mar­ket research firm, the aver­age price of ammo­nia has risen steadily over the past few years, increas­ing from roughly $215 per ton in September 2020 to $1,200 by the end of March 2022. In the same period, urea prices have risen as well, but in a far less dra­matic fash­ion.

The Russian inva­sion of Ukraine, clo­sure of Chinese ports in response of Covid-19 out­breaks, infla­tion and ris­ing nat­ural gas prices were cited by the firm as some of the main rea­sons for the dra­matic price increases.

See Also:Brussels Wants at Least €53B for European Agriculture in 2023

Natural gas is a key ingre­di­ent in ammo­nia pro­duc­tion, while China is one of the world’s largest pro­duc­ers of urea.

In 2021, the European Union imported 2.9 mil­lion tons of ammo­nia and 4.7 mil­lion tons of urea. World Bank data indi­cate that Russia, Ukraine and Belarus are among the top 10 exporters of anhy­drous ammo­nia and urea to the European Union.

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While the con­flict in Ukraine has severely reduced its pro­duc­tion of both prod­ucts, the E.U. also imposed retal­ia­tory sanc­tions on pro­duc­ers in Russia and Belarus. Russia has also curbed its anhy­drous ammo­nia exports to other parts of the world, fur­ther squeez­ing the mar­ket.

While sev­eral of the other main sup­pli­ers of these ingre­di­ents to the 27-mem­ber bloc ben­e­fit from free trade agree­ments with the E.U., a sub­stan­tial amount comes from other coun­tries sub­ject to tar­iffs rang­ing from 5.5 to 6.5 per­cent.

To increase sta­bil­ity of sup­ply, it is appro­pri­ate to tem­porar­ily enlarge the geo­graph­i­cal scope of sup­ply­ing coun­tries beyond those who ben­e­fit from a free-trade agree­ment, as sup­ply is cur­rently con­cen­trated in a rel­a­tively small num­ber of pref­er­en­tial sup­pli­ers,” the com­mis­sion wrote in its pro­posal.

The European Commission added that the tar­iff reduc­tion would help the E.U. cre­ate a more diver­si­fied port­fo­lio of ammo­nia and urea imports, which would shield farm­ers from region-spe­cific price fluc­tu­a­tions and make prices more sta­ble long-term.

The pro­posal will now move to the Council of the European Union, which helps coor­di­nate the adap­ta­tion of Europe-wide leg­is­la­tion in each mem­ber state, for review.



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