The European Commission’s proposal to impose additional customs duties on Russian fertiliser imports is worrying the EU agricultural sector, as Russia accounts for 25% of imports.
The EU’s latest challenge in its dispute with Russia is trying to balance targetting Russian fertiliser imports while avoiding serious negative repercussions for European agriculture.
At the end of last week, EU member states adopted a European Commission proposal to impose additional customs duties on imports of agricultural products from Russia and Belarus.
The Commission argues that as things stand, member states would be in a vulnerable position if Moscow were to introduce coercive measures against them. In other words, European food security is at stake.
Farmers’ warning
But the measure is worrying the EU’s farming community. Copa-Cogeca, the organisation which represents the interests of the sector in Brussels, points out that the industry is heavily dependent on Russian fertilisers.
“Already today, we import from other third countries, but increased demand will generate more pressure in terms of logistics, and therefore higher costs. These cost increases will generate agricultural inflation, which will have repercussions in terms of lower incomes for agricultural producers and reduced competitiveness,” insists Dominique Dejonckheere, energy policy adviser at Copa-Cogeca.
Russian fertilisers account for around 25% of EU imports. According to the Commission, additional customs duties per tonne of fertiliser could gradually rise from €40 or €45 to €315 or €430 over three years.
Copa-Cogeca points out that fertiliser purchases “account on average for 10% of a farm’s variable costs. But for some sectors, notably field crops, cereals and oilseeds, fertiliser expenditure represents around 30% of variable costs,” explained Dejonckheere.
Striking a balance
At the European Parliament, the text’s rapporteur, MEP Inese Vaidere (EPP), acknowledges that all parties will have to take a step towards each other.
“I would say that this is a balanced proposal. There are always a lot of interests at stake. And if you make a legislative proposal or even a legislative act, you can’t say that everyone concerned will be 100% satisfied. That’s not the case,” says the Latvian MEP.
But she believes that Europe needs to act and think strategically. “Russia has managed to produce fertilisers from cheap Russian gas and sell them on the European market at very low prices. This means that if we buy these Russian fertilisers, we continue to feed the Russian war machine. Is that acceptable? No, it’s not acceptable.”
“So my personal opinion is that this proposal could or should have been put forward three years ago,” she adds.
Strengthening European industry and diversification
The Commission believes that its proposal will increase domestic production of fertilisers and strengthen the industry through these additional taxes.
The sector has suffered from the energy crisis and the sanctions against Russia, as the manufacturing of nitrogen fertilisers requires natural gas to produce ammonia for use in fertilisers.
“Yes, there is still sufficient production capacity in Europe. But the issue for us is not so much availability as it is price. We need fertilisers at affordable prices, and on this issue we have no guarantees from the industry. The industry’s problem is that energy costs are too high,” says Dejonckheere.
To provide greater visibility and ensure affordable prices, the Commission proposes diversifying supplies from various other countries.
“In the event of a shortage, we have partners all over the world and this is also a means of supply. And I don’t think this should seriously affect our production of agricultural products,” says Inese Vaidere.
EU member states are in agreement on principle, with the exception of Hungary, and are keen to move forward. However, they regret the absence of an impact study and will therefore want regular monitoring of the situation.
The European Parliament will formally take up the issue at the beginning of next month. Once its position has been adopted, MEPs will have to reach agreement with the member states on a joint text.
