Members' Research Service By / February 10, 2023

Ensuring fertilisers are available and affordable in the EU

For millennia, farmers have resorted to organic and mineral fertilisers to increase the quality and productivity of their crops.

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Written by Antonio Albaladejo Román.

For millennia, farmers have resorted to organic and mineral fertilisers to increase the quality and productivity of their crops. Some studies even date the use of fertilisers in Europe to almost 8 000 years ago. Today, fertilisers remain a key agricultural sector input, with a direct influence on the availability and affordability of food products in the EU. Despite their importance for agriculture, the production and over-use of fertilisers also entails environmental and health risks.

The agri-food sector relies mostly on three mineral substances for fertiliser production: nitrogen, potassium and phosphorus. Nitrogen fertilisers are the most-consumed mineral fertilisers in the EU (10 million tonnes in 2020) and their production process is heavily dependent on natural gas (hydrogen from natural gas and nitrogen from the air are combined to produce ammonia, an intermediate compound later turned into nitrogen-based fertiliser). This reliance on significant energy inputs is a determinant element in the global food crisis that resulted from the COVID‑19 pandemic and the Russian invasion of Ukraine.

Following the initial COVID‑19 outbreak, fertiliser producers were hit by travel restrictions and labour shortages, as well as the global logistic bottlenecks that accompanied the post-pandemic economic recovery. The high energy prices recorded in 2021 contributed to the first spike in fertiliser prices in the second half of the year. The Russian invasion of Ukraine in February 2022 later exacerbated this inflationary tendency.

Before the war, Russia represented 16 % of global exports of fertilisers and nearly half of the EU’s imports of natural gas. Seeking to undermine global food security, the regime restricted Russian fertiliser and energy exports, constraining supplies and increasing prices. Although to safeguard global food supplies, the EU avoided targeting Russia’s agricultural production, it sanctioned Belarusian potash exports to curb this importance source of revenue for Minsk. Due to the excessively high prices for natural gas, 70 % of EU industrial production had to shut down in the summer of 2022. As a result, European farmers were hit by soaring fertiliser prices (149 % annual increase in September 2022), on top of higher costs for other critical inputs such as energy, seeds, and feedstuffs. Consequently, there was a dramatic increase in food inflation in the euro area – 13.8 % in December 2022, up from 3.2 % in 2021.

Tackling the rising fertiliser prices was a key priority when the European Commission proposed measures to avert a food security crisis in the aftermath of Russia’s invasion. A temporary crisis framework allowed for State aid measures, to offset rising fertiliser prices. Moreover, in November 2022 the European Commission put forward a communication on ensuring available and affordable fertilisers, outlining a series of domestic and international actions to guarantee the global supply of this critical agricultural input. In the short term, the European Commission encouraged Member States to prioritise fertiliser producers’ access to natural gas in case of shortages. In the medium and longer term, the communication highlighted the common agricultural policy strategic plans’ potential to ensure sustainable fertiliser use through import diversification, increased optimisation, and a greater emphasis on organic and sustainable fertilisers.

The European Parliament has devoted significant attention to the inflationary pressures on the prices of fertiliser. In its 24 March 2022 resolution, Parliament identified fertilisers’ critical role in the agricultural sector and their importance for EU and global food security, calling on the European Commission to ensure a stable and affordable supply. The Parliament’s focus on available and affordable fertilisers has continued into 2023. At the February II 2023 plenary session in Strasbourg, Members are set to question the European Commission on what additional measures will be adopted to ensure fertiliser availability, the EU’s future self-sufficiency in this critical agricultural input, and farmers’ access to information and resources to improve soil fertility and fertiliser management. A vote on a European Parliament resolution on the European Commission’s November communication is expected to follow the debate.

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