Fertilizer firms slam EU’s slow response to Russian imports “too little, too late”

European fertilizer producers have warned that newly proposed tariffs aimed at curbing Russia's ability to flood the EU market with cheap fertilizer are "too little, too late."

The industry has faced significant financial strain in recent years as costs have soared, while Russia has leveraged its gas resources to ramp up fertilizer production and exports, circumventing sanctions imposed after its full-scale invasion of Ukraine, Caliber.Az reports via foreign media.

An unnamed fertilizer executive described the situation as "textbook dumping." Fertilizer, a crucial agricultural input, is heavily dependent on natural gas as a feedstock, leaving European manufacturers struggling to compete against persistently high gas prices.

The European Commission announced on January 28 a proposal for a gradual increase in tariffs on specific fertilizers from Russia and Belarus over the next three years. The current tariff rate of 6.5 per cent would be raised incrementally, a measure that must now be approved by the European Parliament and the Council of Ministers. The policy has been designed to avoid disrupting major agricultural nations such as France and the Netherlands.

However, European fertilizer companies, many of which are facing serious financial difficulties, remain dissatisfied.

"The EU has dragged its feet on action," said Svein Tore Holsether, chief executive of Yara International, a Norwegian nitrogen-based fertilizer producer, whose net income plummeted by 98 per cent to $54 million between 2022 and 2023. "Now an extended phase-in period only kicks the can further down the road as it will only start impacting the agricultural season from 2026 and even 2027."

Holsether urged the EU to "increase the ambition level," arguing that while tariffs could help restore market balance, "unfortunately it is too little, too late."

Ahmed El-Hoshy, chief executive of Fertiglobe, a fertilizer company based in the United Arab Emirates, had previously highlighted the struggles faced by European producers due to rising labour, energy, and regulatory costs. "Something has got to give," he said, adding that tariffs "would have a big effect on the European landscape to protect industry."

Meanwhile, the United States has encouraged its farmers to take advantage of the situation by purchasing cheaper fertilizer to reduce their production costs.

Holsether pointed out that with natural gas prices in Europe "345 per cent higher than in the US, and even more compared to Russia," European manufacturers might be forced to relocate operations across the Atlantic. He also warned that the fertilizer sector would struggle to recover from production declines.

"These industries are not like restaurants during Covid, where you shut down and then reopen when circumstances change," Holsether explained. "When you move production elsewhere and invest in new facilities, they stay. It’s not like you then go back."

The European Commission defended its proposal, stating that the new tariffs would apply to the 15 per cent of agricultural products from Russia for which import duties had not already been raised. "Such imports, particularly of fertilizers, make the EU vulnerable to potential coercive actions by Russia and thus present a risk to EU food security," it said in a statement.

Under the plan, additional tariffs on Russian and Belarusian fertilizer would initially be set at 13 per cent and rise to 50 per cent over three years, allowing farmers time to seek alternative suppliers. These increases would be in addition to the existing 6.5 per cent duty.

Leo Alders, president of trade association Fertilizers Europe, urged Brussels to introduce higher tariff levels, starting at a minimum of 30 per cent and increasing every six months.

"While we strongly support the course of action, the urgency of the current landscape demands a more ambitious approach," Alders stated.

Despite the Commission's intervention, the European fertilizer industry remains deeply concerned that the measures will not be implemented swiftly enough to prevent further financial strain and potential production relocations.

By Aghakazim Guliyev