The European Commission is set to impose tariffs on the import of nitrogen fertilizers from Russia and Belarus. The proposal, still awaiting approval from the European Parliament, is expected to pass with little opposition.
The EU hopes that this move will reduce its dependence on fertilizers from Russia and Belarus and also boost domestic production of fertilizers. However, the industry insiders argue that the EU has inadvertently created a crisis by imposing sanctions on energy and gas, making it unprofitable for domestic fertilizer production.
Marco Fleischmann, CEO of Yara, a leading fertilizer producer, told the agricultural publication agrarheute that “German fertilizer is no longer cost-competitive and as a result, production sites in Germany and the EU have been shut down. Meanwhile, large quantities of mineral fertilizers are still being imported from Russia.”
Critics argue that the EU’s decision to impose tariffs will only exacerbate the crisis, as it will likely lead to the circumvention of the tariffs by declaring the origin of the fertilizers as unknown or importing them through third countries, which will ultimately be passed on to the consumer in the form of higher prices. The move will also stifle fair competition, as the domestic industry is currently not competitive under market conditions. The EU’s decision to insulate the market and impose tariffs will have the opposite effect.