The latest interruptions of Russian gas flows to Europe have reignited debates on fertiliser import tariffs, but farmers and industry remain divided over whether tariff suspensions should include all mineral fertilisers.

According to data from the industry association Fertilizers Europe, Russia and Belarus provide 60% of the EU’s fertiliser, and sanctions introduced in March on imports of potash from Belarus and interruptions to trade with Russia have put significant pressure on fertiliser supply.

In response, the European Commission proposed to suspend tariffs on some inputs used for producing nitrogen fertilisers – namely urea and ammonia – until the end of 2024.

Member states have yet to approve the proposal, but farmers are urging decision-makers to go further.

“The situation regarding gas supply has come to a head, and we are facing a reduction or even partial shutdowns of fertiliser production in Central Europe,” the German Farmers Association (DBV) warned earlier this week, calling for a suspension of tariffs on “all standard mineral fertilisers”.

This is because, faced with rising agricultural input prices, farmers will “need cost containment wherever possible,” according to the association’s vice-president, Detlef Kurreck, who stressed that for a stable 2023 harvest, farmers are “reliant on the availability of fertilisers.”

At the end of last week, Moscow halted gas flows via Nord Stream 1, a key pipeline linking Russia to Germany via the Baltic Sea, and reduced deliveries to French energy giant Engie.

Russian President Vladimir Putin raised further worries on Wednesday when he threatened to halt all energy shipments to Europe should Brussels go ahead with a proposal to cap the price of Russian gas.

The farmers’ association thus called on the Commission to widen its proposal and include, among other things, liquid fertilisers (so-called UAN fertilisers), as well as other types of inorganic fertilisers.

Likewise, a spokesperson for the EU farmers’ association COPA-COGECA told EURACTIV that the organisation backs the arguments in the statement.

In addition to reducing imports, domestic producers in the highly gas-intensive mineral fertiliser industry have also been struggling with gas price hikes and supply worries.

The debate around tariffs on liquid fertilisers is not new.

In September 2021, COPA-COGECA rallied against anti-dumping measures the EU executive had taken on fertilisers from major exporters like the US, Russia, and Trinidad and Tobago, arguing the step was at the root of price increases.

Unwelcome ‘support’ for EU industry

But while farmers and the Commission argue that tariffs on inputs used in fertiliser production should be suspended, among other things, to support struggling domestic fertiliser manufacturers, the European fertiliser industry itself does not condone this supposed help.

Indeed, in the face of soaring gas prices, “European fertiliser producers are facing an unprecedented situation,” Jacob Hansen, director of Fertilizers Europe, told EURACTIV.

Natural gas costs being eight to ten times higher in Europe compared to the US “of course puts European producers in an uncompetitive position”, he added.

The organisation estimates that around 70% of European ammonia production capacity has been curtailed.

However, according to Hansen, lifting tariffs and thereby making imports less costly relative to domestic products is not the best way to remedy the situation – neither for farmers nor fertiliser manufacturers.

“It is in the long-term interest of European farmers to have a strong and well-functioning domestic fertiliser industry so that we do not get dependent on Russian oligarchs for fertilisers,” he stressed.

Maintaining EU tariffs is “therefore important to help the industry get on its feet and restart its ammonia and fertiliser production”, he added.

Meanwhile, Austrian Green EU lawmaker Thomas Waitz argued that the EU’s agriculture sector should reduce its dependence on artificial fertiliser imports and its susceptibility to geopolitical events by focusing on natural measures like green manure or the cultivation of legumes.

“This is not only good for our biodiversity, but also for soil health and the climate, as well as making agriculture more resilient against all the crises,” he told EURACTIV.

The Commission’s proposal is set to be discussed by the member states in the coming months.

Source: Greekreporter.com