E.U. Announces Measures to Ensure Fertilizer Supply, Lower Costs

The Commission's plans include excluding fertilizer producers from natural gas rationing, financial aid for farmers and the liberalization of international fertilizer trade.
Nov. 14, 2022
Daniel Dawson

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The European Commission has announced a series of mea­sures to ensure the avail­abil­ity and afford­abil­ity of fer­til­iz­ers for farm­ers in the 27-mem­ber bloc.

Commission offi­cials blamed sup­ply chain dis­rup­tions caused by the Covid-19 pan­demic and the bloc’s ongo­ing energy cri­sis for record-high fer­til­izer prices. By its esti­mates, fer­til­izer prices have risen 149 per­cent year-on-year since September 2021.

As key con­trib­u­tors to the food sec­tor, fer­til­izer pro­duc­ers can be pri­or­i­tized for con­tin­ued and undis­rupted access to nat­ural gas in the case of rationing.- Janusz Wojciechowski, European agri­cul­ture com­mis­sioner

According to Fertilizers Europe, a trade asso­ci­a­tion, Europe pro­duced 18.3 mil­lion tons of nutri­ent fer­til­izer and con­sumed 17 mil­lion tons in 2021. Overall, 134 mil­lion hectares of agri­cul­tural land in the E.U. are fer­til­ized.

While the E.U. is a sig­nif­i­cant global fer­til­izer pro­ducer, the com­mis­sion warned that it depends on imports of nat­ural gas, phos­phates and potash to man­u­fac­ture fer­til­izer.

See Also:Ahead of the Harvest, Olive Oil Production Costs Keep Rising

In the sum­mer of 2022, the com­mis­sion found that nat­ural gas accounted for 90 per­cent of the vari­able pro­duc­tion cost of ammo­nia, a key com­po­nent of fer­til­izer pro­duc­tion.

By August, when nat­ural gas prices peaked in the E.U., the indus­try had shut down 70 per­cent of its ammo­nia pro­duc­tion. The bloc attempted to mit­i­gate these impacts by propos­ing to drop tar­iffs on imports of ammo­nia and urea, another fer­til­izer ingre­di­ent.

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Currently, fer­til­izer pro­duc­tion is run­ning at 50 per­cent capac­ity in the bloc. However, com­mis­sion offi­cials warned that exports had dropped and fer­til­izer prices con­tin­ued to rise, forc­ing olive farm­ers and oth­ers to make dif­fi­cult deci­sions.

High fer­til­izer prices affect farm­ers’ pur­chas­ing and plant­ing deci­sions, and this, in turn, might affect the next sea­son’s har­vest and the E.U.‘s con­tri­bu­tion to global food avail­abil­ity and afford­abil­ity,” the com­mis­sion warned in the report.

In the long term, the bloc plans to mit­i­gate high energy prices by reduc­ing its imports of Russian nat­ural gas and reduc­ing the use of fos­sil fuel-based fer­til­iz­ers.

However, in the short term, the com­mis­sion has announced a series of domes­tic and inter­na­tional actions to sup­port farm­ers.

In the short term, we have out­lined actions to ensure the imme­di­ate avail­abil­ity and afford­abil­ity of fer­til­iz­ers,” Janusz Wojciechowski, Europe’s agri­cul­ture com­mis­sioner, wrote in a Tweet.

As key con­trib­u­tors to the food sec­tor, fer­til­izer pro­duc­ers can be pri­or­i­tized for con­tin­ued and undis­rupted access to nat­ural gas in the case of rationing,” he added.

The com­mis­sion has also amended its tem­po­rary cri­sis frame­work to enable sup­port for farm­ers and fer­til­izer pro­duc­ers.

We have also increased flex­i­bil­ity and sup­port pos­si­bil­i­ties for com­pa­nies affected by ris­ing energy costs, such as fer­til­izer pro­duc­ers,” Wojciechowski said.

The com­mis­sion will also expe­dite €450 mil­lion from its agri­cul­tural reserve to off­set what farm­ers are pay­ing for high input costs.

While the com­mis­sion plans to help farm­ers get through the cur­rent crop year, the bloc will also begin incen­tiviz­ing the pro­duc­tion of organic fer­til­iz­ers and more closely reg­u­late the mar­ket to pre­vent price goug­ing.

On the inter­na­tional stage, the com­mis­sion said it would lobby for avoid­ing export restric­tions on fer­til­izer and pro­mote global fer­til­izer trade trans­parency, among other sim­i­lar mea­sures.

The cur­rent cri­sis is an oppor­tu­nity to accel­er­ate the tran­si­tion to a sus­tain­able agri­cul­ture and a sus­tain­able food sys­tem, away from an undue depen­dence on syn­thetic fer­til­iz­ers, while ensur­ing an ade­quate and afford­able fer­til­izer sup­ply to farm­ers in the E.U. and in the world,” the com­mis­sion report con­cluded.



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