Europe searches for alternatives in fertiliser supply battle

The battle for fertiliser, a vital commodity for food production, has emerged as one of the by-products of the Russia/Ukraine conflict, leaving states in Europe and elsewhere scrambling for alternative suppliers. Though alternatives exist there is no obvious quick fix.

“Gas is a major raw material for fertiliser’s production, and Europe imports almost 40% of the latter from Russia” Jacob Hansen, Director General of Fertilizers Europe, told EURACTIV. Hansen’s association represents mineral fertiliser manufacturers in the EU.

“Putin is playing games with gas, and this led to very high fertiliser prices, and without them, we do not have food security” added Hansen.

That leaves European states facing difficult and potentially limited choices in how to ensure their food security, especially with winter now approaching.

Mineral fertilisers are used for 50% of the food production in Europe.

“A third of our imports of ammonia, which is a very basic fertiliser, and the phosphate and potash, come from Russia”. Overall, “60% of imported fertilisers come from Russia and Belarus,” he said.

Phosphate and potash or potassium chloride are two of the three main chemical nutrients used in commercial fertilisers, the other being nitrogen.

Russian fertilisers are not directly targeted by Western sanctions but their export to the rest of the world is to some extent affected by the restrictive measures as shipping and insurance companies overcharge high premiums to take the risk of shipments.

On the other hand, the EU banned all imports from Belarus of potash, which is largely deficient in Europe, in its sixth package of sanctions outlined last March

Building a new value chain with other suppliers is a slow process. “The industry is reducing its dependence on Russia, but it is a gradual process, it will not happen from one day to the next. We are talking about millions of containers, hundreds of ships,” said Hansen.

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Stepping up

One of the few viable alternatives to Russian fertiliser is Morocco, which already accounts for 40% of Europe’s imports of phosphate.

That could increase substantially in the coming months and years. During the first quarter of 2022, Morocco’s state-owned OCP group, the country’s phosphate rock miner and phosphoric acid manufacturer and fertiliser producer, recorded a turnover of €24bn – up by 77% compared to last year, over the same period, 

OCP officials have indicated that production could increase by 50% over the next four years.

“The most obvious solution is to buy more fertilisers from North Africa – particularly Morocco – and the Middle East, maybe South Africa,” said Hansen. 

“So obviously Morocco is encouraged to step up their production to feel the gap”. 

However, that leaves the OCP potentially facing a tricky geopolitical choice.

Prior to the Russian invasion, the OCP had sought to prioritise increasing supply to sub-Saharan Africa as part of a broader diplomatic push by Morocco, which joined the African Union in 2017 following a long-running dispute with other states over the status of Western Sahara, to integrate itself as a major political player in Africa.  

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Meanwhile, African leaders and the African Union have complained that EU sanctions against Russia have left them as the victims of a second ‘Cold War’  facing shortages of food and fertiliser, increasing the pressure on Morocco, as well as fellow fertiliser producers Egypt and South Africa, to prioritise the African market. 

An EU source told EURACTIV that “EU sanctions do not target food product inputs such as fertilisers with a view to not negatively affect global food security”.

However, African leaders contend that the sanctions on Russia’s financial system and its exclusion from the SWIFT transactions system make it harder for countries to buy its commodities.

Speaking from Istanbul on 20 August, UN Secretary-General Antonio Guterres said that the deal between Russia and Ukraine to reopen Black Sea ports to grain exports also involves the commitment to an “unimpeded access to the global markets of Russian food and fertilizer, which are not subject to sanctions.”

As other African states report their own fertiliser shortages, OCP has donated 180,000 tonnes of phosphate and a further 350,000 tonnes at a discount to African farmers.

In terms of replacing other supplies needed for fertiliser production such as ammonia, a substance that Russia and Belarus have plentiful supplies of, Canada and Algeria have been cited as potential alternative sources.

Diversifying

An EU official told EURACTIV that the European Commission is working on a mid and long-term solution “to reduce dependency”.

“The EU fertilisers industry can diversify its sourcing when it comes to imports. For each nutrient there are several possibilities of alternative sourcing in the world and reducing the previous level of dependency on Russia for fertilizers is possible,” said the official, who added that the EU executive expects that the bloc’s own fertilisers industry will be in a position to serve EU farmers in next year, from both domestic production and from imported sources. 

“High level of selling prices for grains should allow EU farmers to purchase the necessary quantities of fertilisers”, despite the increase of the latter prices, the source said.

The Commission also announced a support package of €500 million in March, “to safeguard food security and resilience of food systems” and to finance measures to address the rising costs facing the agricultural sector.

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