The European Commission (EC) this week presented a new plan of measures and actions to mitigate the impact of rising fertilizer prices. This should support both farmers and industry with the challenges they currently face in the field of fertilizers. In the short term, this means nothing in terms of fertilizer prices.
Fertilizer prices for European farmers have increased by 149% on average in September 2022 compared to the same month in 2021. As a result, farmers buy and use less fertilizer. This can reduce the yield and quality of the upcoming harvest, the EC reports in the report. This has a negative effect on food security, and Europe wants to prevent this with the new fertilizer plan.
Greening must solve the fertilizer crisis
The new plan will not be the same for every Member State, because Member States are allowed to implement some measures themselves, such as financially supporting farmers and fertilizer producers. Furthermore, the EC will examine together per Member State whether it is worthwhile to open the agricultural crisis reserve worth 450 million euros in order to support the most affected farmers.
However, what the EC emphasizes – and that sounds contradictory – is precisely reducing the use of fertilizer. According to the new plan, farmers must invest more in nutrient management, precision agriculture, soil quality and organic agriculture. This means less fertilizer is needed. The EC also wants to encourage the use of organic fertilizer substitutes, derived from animal and vegetable raw materials. By replacing artificial fertilizers with organic fertilizers as much as possible, the EU will also use less gas. Organic fertilizer substitutes are more of a long-term option, says the EC.
Market transparency
Brussels also wants to improve market transparency in fertilizers. This should be done by disclosing and sharing data on production, use, prices and trade. In addition, the intention is to import more raw materials from other parts of the world and to minimize import tariffs.
The entire sector has responded critically to the plan. It is unclear and will not offer either the industry or farmers a way out, according to the reactions. It is clear that Brussels wants farmers to use manure more efficiently. The EU's goal is to reduce nutrient losses by 50% by 2030, with an expected need for 20% less fertilizer (= total organic manure and artificial fertilizer). In any case, in the short term, the new plan will not solve anything in the fertilizer market. With the current gas price, which is still falling and the fertilizer market is also cooling down, the need is therefore somewhat less. The expectation is that the fertilizer market will remain at a high level.