The European Union will release emergency funds to help farmers deal with soaring fertilizer costs caused by the Iran war, under plans to support the sector unveiled Tuesday.
Brussels has been under pressure to take action to blunt the impact of the Middle East crisis on agriculture, as the increase in fertilizer prices risks pushing up food costs across the bloc.
“We will support European farmers so they can buy the fertilizers they need for the next harvesting season,” said the EU’s agriculture commissioner, Christophe Hansen.
But agriculture lobbying group Copa-Cogeca said the plan was disappointing, and failed to provide “any real response.”
About a third of fertilizers shipped by sea reach the global market through the Strait of Hormuz, which has been effectively closed by the US-Israeli war against Iran.
That has sent prices up, and the World Trade Organization (WTO) has warned that the blockade threatens global food security, particularly in Africa and South Asia.
As a first measure, the European Commission said it would disburse what is left in the bloc’s agriculture crisis reserve, around €200 million ($232 million).
It will also propose boosting the reserve by a “substantial amount” before the summer, Hansen said, later explaining Brussels was hoping to make another €200 million available.
“The commission will provide targeted exceptional support to the most affected farmers,” Hansen told the European Parliament in Strasbourg.
In Europe, the price of nitrogen fertilizers, which are derived from gas, has risen to about €500 a tonne, from €380 last winter.
‘Food crisis’
It was a one-two punch for farmers already facing higher costs because of the war in Ukraine.
“If, in the coming weeks and months, prices for the main categories of fertilizers remain at their current levels, the farming crisis will quickly turn into food inflation for European consumers and a food crisis on a global scale,” said Copa-Cogeca.
The group organized a small protest outside the European Parliament in Strasbourg, where the EU plan was presented.
Brussels has imposed high tariffs on fertilizers from Russia, a major producer, and plans to end imports entirely by 2028 in a bid to hit Moscow’s war coffers over its assault on Ukraine.
Cereal producers, who need vast amounts of fertilizer, have been hit particularly hard, according to the industry.
Hansen said some farmers were planning to leave some land fallow to save on tractor fuel and fertilizers. “It is food security we cannot afford to lose,” he said.
Fertilizers account for more than seven percent of input costs for the EU farming sector in general, rising to 16 percent for arable crop farmers, according to Brussels.
The EU, which is highly dependent on imports, is also looking to diversify supply sources and increase local production.
Brussels said it wants to allow farmers to make more use of digestate, a nitrogen-rich byproduct of biogas, in a move that has environmental groups worried over water pollution concerns.
It also suggested it might grant fertilizer-makers extra flexibility under the EU’s carbon market scheme, which has heavy polluters pay for the greenhouse gases they emit, under certain conditions.
But it has ruled out a pause in the application of the EU’s carbon border tax on fertilizers – something Copa-Cogeca called for, along with a suspension of tariffs on all fertilizers bar those coming from Russia and Belarus.
Supporters point out the carbon levy targets imports to level the playing field for European industries subject to strict emissions rules, saying their development is key if Europe wants to avoid a similar crisis in the future.
About 30 percent of EU nitrogen fertilizer needs is imported, rising to 40 percent for potash.
For phosphatic fertilizers, about 70 percent of the bloc’s demand is met through imports of phosphate rock, according to EU figures.