Grinding to a halt, Europe’s fertiliser sector facing ruin by Russia

Europe’s Herculean efforts to reduce energy reliance on Russia have not been matched when it comes to fertiliser. The European Council’s hesitation to add fertilisers to Russian sanctions is putting Europe’s fertiliser industry at risk of catastrophe, and accentuating Europe’s food insecurity.

Echoes of Europe’s steel sector demise now sound for Europe’s fertiliser firms, as lawmakers torturously calibrate the risk-reward of adding cheaper Russian fertiliser to the banned import list. As with EU steel a decade ago, when Europe failed to facedown China’s anti-competitive strategy, it could be too little too late – many of Europe’s fertiliser plants are already shuttered or on reduced capacity.

Energy and food sovereignty

Euractiv spoke in depth with Fertilizers Europe’s new President, Leo Alders, he said: “If Europe is to ensure food sovereignty, it must maintain resilient domestic production chains with a minimized dependency on imports. Since the war in the Ukraine, the surge in fertiliser imports from Russia has weakened the EU’s food security. One reason is that the fertiliser sector is a high energy consumer.”

According to Eurostat, the European Union experienced significant changes in its fertiliser imports from Russia during 2022-23. Nitrogen imports into the EU increased by 34% compared to the previous period. Urea imports surged by 53%, effectively doubling the volumes recorded in 2020-2021. Russia contributed significantly, with 40% of the urea imports originating there.

Although the trend has slowed slightly in the current season, Russian urea still constitutes almost one-third of the total imports.

Europe managed to rapidly reduce energy dependency on Russia. However, this achievement came at a considerable cost for both households and industries. The fertiliser industry is deeply concerned about repeating the same dependency pattern for fertilisers.

Importing fertilisers from Russia, or other regions, into Europe is not just about benefiting from lower external energy costs, but there’s also the significant risk of higher environmental costs. Imported fertilisers tend to have a much higher carbon footprint (approximately 50-60% higher) compared to European production.

Strategic dialogue forum

At the end of January, Ursula von der Leyen, President of the European Commission, initiated the Strategic Dialogue on the Future of Agriculture, a new forum announced in her 2023 State of the Union address. The Strategic Dialogue aims to shape a collective vision for the EU’s farming and food system, tackling thorny challenges such as ensuring fair livelihoods for farmers, sustainable agriculture, leveraging knowledge and technology, and fostering a competitive EU food system.

Alders, also CEO of LAT Nitrogen, spoke with Euractiv after his participation at the forum with President von der Leyen.

He explained that the Strategic Dialogue discussions are set against a background of an expanding world population, where the need for food will increase, but at the same time due to climate change, the farmable land will decrease. This, he says, means there’s need for higher efficiency, and nutrients will play an important role in gaining that efficiency.

“As temperatures rise, it’s changing our future. Hotspots are emerging across Europe, notably in Spain and Portugal. Consequently, they will produce less, so we need really a policy to secure that food can be produced in Europe in the future.”

Avoiding polarisation

President von der Leyen has said one aim of the forum was to avoid polarization. She wants to bring everybody together to talk about how alliances in the agricultural sector can be broadened.

Alders remarked: “If there’s a specific objective, it’s to achieve an endpoint where a consensus could be reached on what needs to be changed in Europe, and what I felt in the first meeting is that everybody in the room was aligned on the need for urgency. We talked a lot about the need to act on climate change, to make the sector more sustainable and to work on competitiveness for all the stakeholders in the value chain.”

The decarbonisation route

As Europe is already committed to funding the decarbonization route, the direction of travel is clear, but Alders says the funding does not completely cover the conversion costs.

“If you want to make Europe’s fertiliser green, it will require lots of technology conversions,” he said, adding, “Technology conversion demands a lot of capital, which impacts agricultural competitiveness, at a time when food competitiveness in Europe is already under pressure – Brussels and Paris saw the raw end of this pressure in recent days with large-scale street protests.”

“Many challenges remain”

Alders said that as a sector the fertiliser industry offers a toolbox of digital farming, enhanced efficiency fertilisers, and advisory services to improve that outcomes. However, he added that the sector wants to see a dedicated funding stream to finance clean fertiliser, which is also linked to nutrient efficiency.

He remarked: “When it comes to nutrient efficiency, we think that Europe can still improve a lot, and we anticipate progress with the EU’s nutrient management plan, which is under development.”

Speaking after the special meeting of the European Council of the first of February, President von der Leyen praised European farmers as dynamic, describing the challenge they face as “a very complex endeavour.”

She said: “In 2022, productivity improved 13%, thanks to their efforts. (…) Last year again, agri-food exports increased by 5%. So, I think it is fair to say that our farmers have shown remarkable resilience in the face of the recent crises. But many challenges remain.”

[By Brian Maguire | Euractiv’s Advocacy Lab ]

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