Irish farmers face highest fertiliser import prices

In 2023, the price gap was still €174 between Ireland and Poland and nearly €200 between Ireland and France.

At other times over the past 13 years, the import price in Ireland usually remained the highest of the four, although it was briefly the lowest for a while in 2011.

The figures come from Grupa Azoty’s submission to a recent Cheap Fertilisers from Russia — Another Threat to the EU Economy event hosted by Polish MEP Krzysztof Hetman. An MEP since 2014, Hetman was recently appointed as Poland’s Minister of Economic Development and Technology.

Grupa Azoty linked the high fertiliser price in Ireland to the loss of the Belfast, Arklow, and Cork-based Irish Fertiliser Industries in 2002 when it was closed by its two shareholders, the Irish government and the London-based ICI. Ammonia produced at Marino Point in Cork Harbour was used by IFI to make agricultural fertiliser.

Grupa Azoty said Ireland is an example of the consequences for countries that do not have their own fertiliser production, and rely 100% on imports.

Now, other member states could lose fertiliser production, because Russian fertilisers, produced cheaply due to state-regulated gas costs, threaten to put the less competitive EU producers out of business.

Unfair competition

Grupa Azoty said unfair competition undermines EU fertiliser manufacturers’ ability to compete effectively and sustain critical investments. And Russian fertilisers are not bound by the stringent environmental standards imposed in Europe, where manufacturers say they are committed to advancing circularity and decarbonisation, in line with the EU’s Green Deal.

For example, EU fertiliser manufacturers are required by the Green Deal to use renewable energy for 42.5% of their energy consumption by next April. And their EU Emissions Trading System costs are to increase significantly.

However, the Green Deal also includes the Carbon Border Adjustment Mechanism, in which fertilisers are one of seven products for which the carbon price paid for EU products is also applied to imported goods.

This could put a big EU border tax on some imported fertilisers, to be fully implemented by 2026.

Grupa Azoty said the fertiliser industry supports 76,000 EU jobs, and if Brussels does not step in with urgent remedial action, temporary shutdowns could turn permanent, putting jobs at stake.

Meanwhile, since Russia invaded Ukraine, the EU has supported the Russian regime by purchasing fertilisers worth €5.5bn. The biggest shares of the fertiliser went to Poland (17%), Germany (11%), France (11%), Belgium (10%), and Romania (8%), A 3% share is attributed to Ireland.

Effectively, by importing Russian fertilisers, the EU indirectly imports Russian gas. This undermines the EU's progress in reducing pipeline gas imports' dependency on Russia from over 40% in 2021 to about 8% in 2023. The EU said this diversification of energy supplies became a necessity after Russia’s unjustified and unprovoked invasion of Ukraine, and its weaponisation of energy.

Russia now accounts for one-third of all urea fertiliser imports to the EU. In Poland alone, Russian imports made up 65% of total urea imports in the first three quarters of 2024.

Fertilisers Europe, which represents manufacturers, has warned that fertilisers are essential for sustaining EU food production, and a future supply shortage could jeopardise food security. These manufacturers say they have the necessary capacity to supply EU farmers' nitrogen fertiliser needs, without having to rely on Russian urea imports. But the EU is an open market, with non-EU imports historically at about 32% of the EU’s demand.

Fertilisers Europe says all available measures must be taken to avoid over-reliance on Russian imports and to safeguard Europe’s fertiliser industry. It proposes a 30% duty on Russian fertilisers, effectively stopping imports. 

"Decisive action is essential to safeguard our economy, ensure food security, and achieve our sustainability goals," it says.

Call for decisive action

The governments of Poland, Estonia, Latvia and Lithuania have also called for decisive EU action on surging imports of Russian and Belarusian fertilisers. In parallel, Denmark, Estonia, Finland, Ireland, Latvia, Lithuania, Poland, and Sweden want a Commission proposal on increased tariffs for EU imports of Russian and Belarus products, including fertilisers.

Now, 30% of the EU's fertiliser imports came from Russia and Belarus (28% plus 2%, respectively), twice that of nearest competitor, Egypt, with 15%. According to Grupa Azoty, in the last year, imports from Russia increased more than 40%, from 2.8m tonnes to 3.7m.

The most alarming increase was in Poland, with Russia and Belarus supplying 22% and 15% respectively of fertiliser imports in 2022, rising to 38% and 4% in 2023, and in the first three quarters of 2024, the share of Russia went to 65%. Russia is pushing competitors out of the EU market.

Further afield, aggressive discount sales of Russian fertilisers have made it the largest supplier of fertilisers to India. In 2018, China had 31% of the market and Russia only 5%, by 2023, it was 15% for China and 20% for Russia.

The fertiliser boom has helped Russia to ease the budget burden caused by the war in Ukraine and the need to increase defence spending, according to Grupa Azoty.

Fertilisers Europe agrees and calls for urgent action to stop Russian fertilisers financing the war and to safeguard the EU’s food and fertiliser autonomy.

The war effort is helped by Russia's export duty on fertilisers increasing to 10%, along with a minimum export duty rate per ton of €11-21.

And high Russian fertiliser profits have swelled the country's 10% tax on excess profit introduced this year. Meanwhile, profits at European fertiliser companies slumped (Norway's Yara, which claims to be the only global crop nutrition company, has seen profits slump from a record €2.5bn in 2022 to €51m in 2023).

Over the past seven years, fertiliser production in Russia increased by 33%, from 45m tonnes to 65mt. This is part of a multi-year development of Russian agriculture planned by the Kremlin to transform the largest country in the world from an importer of agricultural products to an exporter.

Having banned agri-food imports from Western countries in 2014, Russia developed huge farms, subsidised agricultural exports, and attracted international investors into their agricultural sector. Grain exports have become one of Russia's instruments of geopolitical influence and a source of foreign exchange earnings. Alongside this, measures were taken to ensure cheap fertilisers were available for Russian farmers, and for profitable export.

Over seven years to 2020, an estimated €19.4bn was allocated in support for Russian agriculture, according to Grupa Azoty. There are plans to grow production by 3% per annum, by increasing yearly support to about €9.5bn. The focus is on grain, including research for better varieties and new technology, and expanding export potential. Even global warming is helping, by freeing up new Russian lands for agriculture.

The Kremlin's agri-food policies have paid off. Russia's share of global wheat exports was 16% in 2021/22, about the same as the EU, and 2% ahead of Australia. Russia's share in 2022/23 grew to 22%, compared to 16% each for the EU and Canada, and 14% for Australia, Russia's share in 2023/24 is 24%, compared to 16% each for the EU and Canada, and 8-10% each for Australia, the USA and Ukraine.

Russian exports of agri-food products rose from €8.1bn in 2010 to €41.6bn in 2022.