Why do we need a strong European fertilizer industry?

 

Fertilizers

– a critical industry for Europe

Fertilizers enable 50% of European food production, contributing to food security in Europe and beyond.

In doing so, the industry is essential to providing European consumers with nutritious, affordable, and sustainable food, supporting the objectives of the EU Farm to Fork strategy.

Furthermore, the fertilizer industry produces about 40%* of the total of European hydrogen as raw material of ammonia production. It is therefore also uniquely placed to contribute to the objectives of the EU Green Deal and the development of a hydrogen economy in Europe.

*Source: AFRY MANAGEMENT CONSULTING , Hydrogen Development in Europe and Middle East, 2021,

50% of European food production

40% of the total of European hydrogen production

Record-high gas prices are severely impacting the European fertilizer industry with potential consequences for European food security, sustainability, and strategic autonomy

The European fertilizer industry is committed to being a reliable partner in ensuring food security and sustainability in Europe. The industry is part of the European Food Security Crisis Preparedness and Response Mechanism, an initiative to ensure food security in the EU. We are doing our outmost to supply farmers with fertilizers for the next season, despite the difficult economic situation.

However, regions with low nitrogen application rates, are likely to suffer most in case of insufficient nutrient application, which will lead to lower yield and quality.

Due gas prices rising over 1000%* from levels a year ago, 10 times higher than the prices in the US and well above the prices in Asia. European farmers have seen the cost of fertilizers go up by 68%, increasing overall input costs. In parallel, crop prices have also risen considerably: wheat 69%, maize 25% and rape seed 26% compared to July 2021, making it possible for farmers to compensate the higher input costs.**

The recent invasion of Ukraine, sanctions on Russia and energy market instability have created extra challenges to the already difficult situation faced by the industry.

Source: *Fertilizers Europe, **DG AGRI, PRICE DASHBOARD (July 2022)

 

 

Record-high gas prices are severely impacting the European fertilizer industry with potential consequences for European food security, sustainability, and strategic autonomy

With record high prices and gas representing up to 90% of the variable costs in fertilizer production, the situation has become economically unsustainable for our industry. As a result, around  70% of European production capacity has been curtailed.

Meanwhile, most non-EU producing countries have access to artificially low, state-fixed priced gas and are thus profiteering from the artificial price gap. European producers are therefore not able to compete on domestic and global market, furthering the risk of carbon and investment leakage.

The invasion of Ukraine and fertilizer export bans in third countries has shown that the EU should reduce its dependence on material imports from external actors. European Commission initiatives such as REPower EU is a crucial reminder that we need to take action to safeguard European autonomy. EU-wide measures aimed at limiting the price of natural gas are urgently needed.

Less dependence on external actors will contribute to stable local fertilizer production and long-term food security. The EU needs a strong fertilizer industry to continue producing food and in the long-run help develop the European hydrogen economy by using green Ammonia supplied by the fertilizer industry.

Source: The World Bank Data (in US$/mmBtu). Retrieved on the 5th of September 2022.

Source: The World Bank Data (in US$/mmBtu). Retrieved on the 5th of September 2022.