The situation in America demonstrates how quickly the fertilizer market can come under pressure when policy is uncertain and the availability of fertilizer on the market is limited. This is precisely the situation Europe now finds itself in. Not due to a shortage of production capacity, but due to a lack of clarity regarding the policy approach.
The European fertilizer market is still dominated by uncertainty surrounding the Carbon Border Adjustment Mechanism (CBAM), which took effect on January 1, 2026. Market expectations range from approximately €10 to as much as €120 per tonne of fertilizer. This wide range makes it difficult for importers to finalize their planning or budgets due to the high risks. This uncertainty is exacerbated by the fact that the European Commission will only provide clarity on the exact CBAM levies at the end of the first quarter of 2026, with retroactive effect. This makes long-term planning virtually impossible.
Benchmark figures increase uncertainty
Recently published benchmark figures have increased rather than reduced this uncertainty. These are provisional standard values for the amount of CO2 released during the production of a ton of fertilizer within the CBAM system. These benchmarks indicate how much CO2 the European Union assumes is released during the production of a ton of fertilizer and thus form the basis for the CBAM levy. The benchmarks vary by product type, such as ammonia, urea, or NPK, and are applied when importers cannot provide detailed emissions data from producers. The standard values have been deliberately set on the high side to prevent underestimation of emissions. This is precisely the problem, according to many fertilizer analysts. The ranges are wide, the figures are not yet final, and it is unclear whether the European Union will ultimately calculate per country, per producer, or per individual factory. Instead of providing guidance, the benchmarks therefore create additional hesitation in the market.
Parallels with the United States
The situation bears clear similarities to what occurred in the United States last year. Although approximately 65% of fertilizer is produced domestically there, particularly nitrogen, the US remains dependent on imports for approximately 40% of its total supply, particularly for phosphate and potash. Analysts believe it is primarily this dependence that made the market vulnerable, as suppliers were reluctant due to geopolitical tensions and uncertainty surrounding import duties. Between April and August of last year, phosphate imports were approximately 50% lower than a year earlier. At the same time, demand remained high due to high corn prices, leading to significant price pressure.
Structural vulnerability in Europe
For Europe, the risks are potentially even greater. If supplies from outside Europe lag in the first few months of 2026 due to uncertainty about CBAM costs, bottlenecks could arise later in the year. This is not because fertilizers are unavailable worldwide, but because deliveries are temporarily delayed or diverted. Ultimately, growers will feel the consequences. Higher fertilizer prices drive up production costs, some of which will have to be passed on through the supply chain, ultimately leading to higher food prices for consumers. At the same time, imported agricultural products such as wheat and corn remain outside the CBAM and therefore enter the European market more cheaply. This means European growers face higher costs than their foreign counterparts, while often being unable to pass on the full price increase to consumers.