Main points
- The EU is considering the possibility of creating fertilizer reserves and providing financial assistance to farmers due to rising fertilizer prices caused by rising energy prices and unstable supplies.
- The European Commission plans to present a draft new fertilizer strategy, which includes market monitoring, the creation of strategic reserves, and the use of organic alternatives.
The EU will support farmers / Photo Shutterstock
The European Union is considering creating fertilizer reserves and providing additional support to farmers as prices soar, fueled by rising energy prices and supply disruptions amid the Middle East conflict.
The European Union is preparing a new fertilizer strategy
The European Commission plans to present a draft new fertilizer strategy next week, Bloomberg reports. The document includes a number of steps to stabilize the market after another sharp jump in prices in Europe.
The situation has been exacerbated by the EU's dependence on imports of natural gas and ammonia, which are key components for fertilizer production. Additional pressure on the market is being created by high energy prices and the consequences of the conflict in the Middle East.
The European Commission fears that rising fertilizer prices could force farmers to reduce their use, which in turn poses risks to crop yields and quality.
Farmers may be provided with emergency financial support
In the draft strategy, the European Commission proposes to provide financial assistance to the most affected farmers through existing EU crisis mechanisms.
In particular, Brussels plans to mobilize additional funds from the EU budget to increase the agricultural reserve. This will allow for prompt support for farmers during periods of high production costs.
The document also notes that the EU will continue to monitor the domestic and global fertilizer market and is ready to consider new trade measures to expand access to products from different suppliers.
According to the European Commission, in April alone, prices for nitrogen fertilizers in the EU increased by 40% compared to December.
The EU is considering creating fertilizer reserves
One possible solution in the European Union is the creation of strategic reserves of fertilizers and raw materials for their production. This includes the formation of minimum or seasonal reserves, as well as joint procurement mechanisms.
In addition, Brussels plans to make more active use of organic alternatives. In particular, the possibility of wider use of digestate – the organic waste residue after biogas production – is being considered.
The EU could also review the rules of the emissions trading system to support fertilizer producers. Options include a slower phasing out of free allowances for companies that produce organic or low-carbon fertilizers.
It was previously reported that the global fertilizer market is experiencing a new wave of price increases due to the war around Iran and logistics problems. The largest producers are already recording a sharp increase in sales and profits against the backdrop of a shortage of nitrogen fertilizers.
EU accession could cost farmers hundreds of euros per hectare: the Rada is sounding the alarm
By the way, the EU is in no hurry to provide guarantees of support for Ukrainian farmers in the event of Ukraine's accession to the EU. Despite this, the Ukrainian parliament is striving to obtain the best possible conditions for domestic farmers.
-
Ukraine should receive automatic access to EU subsidies after accession to avoid significant costs for farmers to adapt to EU standards.
-
The lack of subsidies could lead to increased competition with European producers, threatening small and medium-sized agribusiness in Ukraine.
The greatest risk concerns small and medium-sized agribusinesses, which will not be able to compete with EU producers, in particular Polish companies in the dairy sector and food industry.