The European fertilizer industry is finding itself in an increasingly difficult position, which has a huge impact on production. According to the sector organization Fertilizers Europe, three quarters of production has come to a standstill. Reason for the German farmers' organization DBV to argue for a national fertilizer reserve. The situation in the Netherlands is less extreme, but here too we cannot escape the consequences.
A national fertilizer reserve, which the Deutscher Bauernverband is advocating, is not a new plan. That idea was also launched this spring. Now that the situation on the fertilizer market is heating up again, the file is back on the table. That says DBV chairman Joachim Rukwied in the German media. In particular, there is a need for sufficient nitrogen fertilizer. German agriculture minister Cem Özdemir says his ministry is closely monitoring the situation. Rukwied warns of a 30% to 40% drop in yields if not enough nitrogen can be applied. Not only does this affect the country itself, but also the rest of the world, when food shortages arise.
European industry hard hit
The European fertilizer industry has been hit hard by skyrocketing gas prices. The industry is heavily dependent on Russian gas and as a result the EU is hit harder than other parts of the world. At current gas prices, which have increased fifteenfold this year, it is not profitable for producers of ammonium and fertilizers to keep their factories running. If they scale production, installations become unprofitable. That is why more and more manufacturers are choosing to shut down their facilities completely. Yara, CF Industries and Borealis, among others, have partially or completely shut down factories. At Yara, production is now running at 35%, says the company itself.
The FAO expects gas prices to rise further, which will further inhibit fertilizer production. That says FAO economist Maximo Torero to Bloomberg news agency. "In this way, the EU becomes an importer of fertilizer instead of an exporter. That puts more pressure on the price level for next season." Fertilizers Europe speaks of a fertilizer crisis and advocates measures and financial support within the EU.
Obstacles to world trade
Global fertilizer exports are not without hurdles. Russia, Belarus and China have all introduced export bans for, among other things, phosphate and potash. In addition, the EU imposes sanctions on phosphate imported from Belarus. It ensures that world trade has to be reshaped. Child of the bill is Africa, which can buy less fertilizer at current price levels. This has a direct impact on food production on the continent.
The shutdown of fertilizer production also has consequences for all kinds of by-products supplied by this industry. The production of Diesel Exhaust Fluid (DEF) – better known under Yara's brand name AdBlue – is also affected. The production of the additive, which consists of demineralized water and urea, is quiet in Sluiskil. Yara currently imports AdBlue from other countries to meet the need. There is no doubt about the availability in our country. It does, however, drive the price up further.
KAS price significantly higher
A sharp price increase is also visible for fertilizers. At the end of May, KAS prices fell by 50%. Since mid-July, the price has been on the rise again. The price for KAS is now about €85 to €89 per 100 kilos, depending on delivery in big bags or in bulk. In a week, the price has risen by 10% and that is the largest increase since the end of July.
The price of phosphate is also on the rise. In a week, the price increased by €14 to €16 per 100 kilos to levels of €102 to €108 per 100 kilos (loose or big bags). Since the beginning of July, this price has also increased considerably by about a quarter.