Even before the Ukraine conflict, there were calls in Poland for a subsidy for the use of fertilizers. High gas prices make fertilizers extremely expensive. So expensive that Polish farmers can hardly afford it. Even the Prime Minister is involved.
With Pole Janusz Wojciechowski at the helm in Brussels, as European Commissioner for Agriculture, the Poles are hoping for more persuasion to get subsidies on fertilizer. At least that's what you read between the lines in Polish media. Even Prime Minister Morawiecki joined the discussion in January and argued for cost reductions for farmers.
Agricultural sector affected
Wojciechowski is busy in discussions in Brussels, but is not going to favor his own country. Ultimately, it is up to all member states to make a decision, he also indicates. However, he is pleased that the agricultural sector as a whole is on the list of sectors affected by the Ukraine conflict. That is still a paper issue at the moment, but could be a prelude to more in the future. For example, financial compensation, as we saw during the corona crisis, or short-term loans to finance cultivation.
Dissatisfaction about the sky-high fertilizer prices has been expressed in Poland for some time; since last fall, when gas prices rose sharply. Because it has now clearly been taken even further, the subject is more topical than ever. Enough for the Polish agricultural sector to emphasize its urgency.
Tackling agflation
Poland claims to be the first country to commit itself to the situation of farmers in the face of agricultural inflation – also known as 'agflation'. High energy prices in particular cause costs to rise in the cultivation of all crops.
One ton of ammonium nitrate now costs 6.100 zloty at Anwil, the largest Polish fertilizer producer. That is the equivalent of €1.284. Since the Russian invasion of Ukraine, the price has increased by more than €650 per tonne. Last spring the price was €252 per tonne. The price of Di-ammonium phosphate (DAP) is now almost €1.300 per tonne. Polish producer Anwil cites gas prices as by far the main reason for these unprecedented increases.
Wheat for €420
High grain prices partly offset fertilizer prices, but not enough. In Poland, wheat is now sold on the physical market for €420 per tonne and grain maize for €355 per tonne. The country can undoubtedly count on more attention now that Ukraine can no longer export grain. What helps exports is the falling exchange rate of the zloty against the euro and dollar. Last Monday you got almost five zlotys for one euro. In mid-February it was still 1 to 4,5.
More than one million Ukrainian refugees have now crossed the border with Poland. All these mouths also need to be fed, which has consequences for the food supply in the country. Not only in the field of grains, but also in vegetables and dairy products, for example.