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

Summary

The European Commission has intro­duced mea­sures to address high fer­til­izer prices caused by sup­ply chain dis­rup­tions and energy crises, aim­ing to ensure avail­abil­ity and afford­abil­ity for farm­ers in the 27-mem­ber bloc. In the short term, the com­mis­sion plans to sup­port farm­ers by drop­ping tar­iffs on fer­til­izer imports, pro­vid­ing finan­cial assis­tance, and pri­or­i­tiz­ing fer­til­izer pro­duc­ers for con­tin­ued access to nat­ural gas in case of rationing, while also work­ing towards a long-term tran­si­tion to sus­tain­able agri­cul­ture.

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.

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.

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.

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.

• European Commission
• Fertilizers Europe