The EU looks to reduce its dependence on Russian fertilisers

The Problem: EU’s Dependency on Russian Fertilizers

The European Union is grappling with a significant challenge as it considers imposing additional customs duties on Russian fertilizer imports, which currently account for 25% of the EU’s supply. This dependency underscores a delicate situation where the EU must balance its geopolitical stance against Russia with the practical needs of its agricultural sector. The imposition of these duties is part of a broader strategy to target Russia economically, yet it risks unsettling the EU’s agricultural stability, which is heavily reliant on these imports. Farmers and policymakers alike are faced with the daunting task of navigating this complex scenario, where economic sanctions and food security are precipitously intertwined.

Farmers’ Fears: Rising Costs and Logistic Challenges

The farming community within the EU is expressing deep concerns regarding the potential consequences of these new tariffs. Copa-Cogeca, a prominent agricultural organization, highlights that the sector’s reliance on Russian fertilizers is substantial, with these imports constituting around 25% of the EU’s total. The introduction of additional duties could escalate costs for farmers, potentially increasing fertiliser prices from €40-€45 per tonne to as high as €315-€430 over three years. This significant rise could burden farmers, particularly those cultivating field crops, cereals, and oilseeds, for whom fertiliser expenditure can reach up to 30% of variable costs. Such an increase not only threatens profit margins but also risks diminishing the EU’s agricultural competitiveness on a global scale.

A Delicate Balance: EU’s Strategic Choices

Policymakers within the EU are acutely aware of the need to strike a balance between asserting economic pressure on Russia and safeguarding the interests of their agricultural sector. MEP Inese Vaidere emphasizing the necessity of strategic action, acknowledges the moral imperative of not indirectly funding Russia’s military activities through continued imports of low-priced fertilizers. However, she also recognizes the intricate web of interests involved, where no decision will satisfy all parties. The proposed tariffs represent a calculated step towards reducing dependency on Russian imports, yet it is understood that this shift will require time and careful management to mitigate adverse effects on EU agriculture.

Strengthening Europe’s Fertilizer Industry

The European Commission views the imposition of tariffs as an opportunity to bolster the EU’s domestic fertiliser industry, which has been hampered by the energy crisis and prior sanctions on Russia. The production of nitrogen-based fertilizers is energy-intensive, with natural gas being a crucial component. While Europe possesses sufficient production capacity, the high cost of energy poses a significant barrier to competitiveness. The Commission suggests that diversifying supply sources and enhancing domestic production could gradually reduce reliance on Russian imports. However, uncertainty persists regarding whether these measures will ensure affordable fertiliser prices for farmers, setting the stage for ongoing challenges in the agricultural sector.

Food Security and the Political Dilemma

Underlying the debate on fertiliser tariffs is a profound concern regarding food security. The Commission warns that dependency on Russian imports renders the EU vulnerable to coercive measures, potentially jeopardizing food supply stability. This vulnerability has become increasingly apparent in the wake of the energy crisis and sanctions. However, the immediate impact of tariffs could strain farmers’ budgets and reduce crop yields, intensifying concerns about food availability and prices. The political dilemma lies in weighing the long-term strategic benefits of reduced dependency against the short-term risks to food security and economic stability.

The Road Ahead: Next Steps for the EU

As the European Parliament prepares to address the issue in the coming month, the path forward remains uncertain. While there is general agreement among member states on the principle of imposing tariffs, concerns regarding the absence of an impact assessment have led to calls for vigilant monitoring of the situation’s evolution. Hungary, dissenting from the majority, raises questions about the blanket approach of tariffs. The eventual agreement between the Parliament and member states will require a nuanced approach, balancing strategic objectives with the practical needs of farmers. The outcome will have far-reaching implications for the EU’s agricultural sector, its energy policies, and its broader geopolitical strategy.