The Middle East crisis and the still-closed Strait of Hormuz are raising concerns about fertilizer shortages and rising food prices, and the European Commission sees the answer in more natural fertilizers, writes Politico.
The EC’s plan to secure fertilizer stocks largely centers around long-planned regulation that would allow for more use of manure and livestock by-products in fertilizer production. But it’s not the quick fix many had hoped for.
Veronika Vrecionová, MEP who chairs the European Parliament’s agriculture committee, said farmers expect bold action and guidelines won’t pay the bills: “Farmers need action, not intentions.” Farm lobbies are also thinking along the same lines. José María Castilla, a spokesman for Spain’s largest farmers’ organization, ASAJA, said that European farmers cannot wait for any more long-term guidelines at a time when production costs continue to rise and European fertilizer stocks are dwindling. The current crisis is not just a question of prices, it is also a question of strategic independence, food security and the survival of European agriculture.
Most fertilizer in Europe is produced from imported natural gas. When the Strait of Hormuz was closed on the last day of February, gas prices soared and
the international fertilizer market became more expensive, with prices rising by as much as 70% above 2024 levels.
The EU’s long-standing ambition to free Europe from its dependence on natural gas for fertilizer production since the closure of the Strait of Hormuz seems prophetic. Producers, farmers and traders are watching to see if Brussels can act quickly in the face of the crisis. However, according to drafts obtained by Politico, the EC plan does little to help farmers against rising costs in the fall or protect consumers from the expected explosion in food prices next year. Instead, Brussels is relying on long-term measures and tools that will only show results years from now. This is partly because the quickest levers – removing tariffs on imports from Russia and Belarus or deferring taxes on carbon-intensive industries – have been too politically controversial.
One of the quickest ways to help farmers would also help Russian dictator Vladimir Putin. That would mean suspending tariffs on imports from Russia or Belarus, which are a major source of revenue for Russia’s aggression. The drafts show that the EC has described the tariffs as necessary to reduce its dependence on Russia.
Another quick tool would be to temporarily suspend the carbon-based business-as-usual (CBAM) tax on fertilizers imported from countries with weaker environmental laws. A draft in April suggested the EC was seriously considering this option as a way to make imported products cheaper. However, such a move would be a departure from the EC’s climate ambitions, and other departments intervened to stop the plan.
The latest drafts take an even tougher approach to the CBAM.
The plan is to not only keep the CBAM in place, but also to add a mechanism to prevent its circumvention.
With short-term options abandoned, the new EC plan focuses on breaking the bloc’s reliance on imported fertilisers linked to fossil fuels. Changes are proposed to a number of existing rules, including the Nitrates Directive. It currently allows farmers in regions at risk of water pollution to use nitrogen from manure, allowing it to be used more than is normally allowed under EU rules. The rules will now also allow the use of liquid fertiliser, a by-product of biogas production.
Herbert Dorfmann, a spokesman for the agriculture committee, said fertilisers could be part of the solution, but not the only answer. Austrian MEP Thomas Waitz said the EC was not doing enough. He asked how many more wake-up calls were needed, and said it was talking about crises while ignoring the root of the problem – the dependence on fertilisers made from fossil fuels.
Even if the war had not started, the EC’s actions would probably have looked the same. Much of the plan had already been in place before the start of hostilities in Iran, in response to the fertiliser crisis caused by Russia’s full-scale invasion of Ukraine. The Middle East crisis has added additional elements, including state aid for farmers.
The sense of political urgency is tempered by the fact that Brussels is drawing up a long-term plan for a problem that has not yet reached European countryside and the food budgets of most Europeans, as the crop is currently being sown, the costs of which were covered last year.
Rabobank analyst Doriana Milenkova said the EC’s decision to draw up a structural plan rather than prepare emergency measures was understandable. Fertilizer for this season was secured before the war, and there is currently no crisis in Europe regarding the availability of fertilizer.
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