On November 30, the European Commission participated in a hearing in the European Parliament dedicated to the fertiliser crisis. European farmers are facing extremely high fertiliser prices, as well as a risk of shortage for mineral nitrogen fertilisers next spring.
During the meeting, Members of the European Parliament Agriculture Committee from most political parties and from five Member States called on the Commission to suspend import duties on nitrogen fertilisers, as well as the antidumping measure currently in force against imports of nitrogen solution (UAN), as the key short-term response to address the crisis.
The increased demand and high prices experienced in 2021 on the global markets for fertilisers and natural gas (the main ingredient in nitrogen manufacturing) has come on top of the imbalanced market situation in Europe, due to tariff import barriers for nitrogen fertilisers. These eliminate any meaningful competition in the EU fertiliser market, resulting in higher domestic prices than in the rest of the world, and in product shortages within Europe.
In the case of the nitrogen solution (UAN), one of the three major nitrogen fertilisers, the EU market is protected by both a 6.5% import duty and an antidumping tax of 22 to 42 €/t, resulting into a quasi-monopoly for EU manufacturers, who enjoy a market share up to 90% this year, while EU farmers will have to pay an extra cost of €500M in 2021 to manufacturers.
According to publicly available information and in spite of the high gas prices, European UAN manufacturers are still making considerable profits. On the other side, the income of EU grain producers, the main UAN users who have to sell their products at global prices, are set to significantly decrease this year due to high fertiliser prices, from their already very low level of €15,500 per year on average (EU grain producers, 2013-2019).
Despite comments made, the suspension of the antidumping duty on UAN fertilisers alone would bring a significant relief to farmers. Taking account of the enhanced competition effect, this could translate into a price decrease of approximately €50/t, representing 16% of the annual income of an average French farmer user. Even more importantly, additional imports would probably allow to avoid the risk of product shortage in the market foreseen in the spring 2022, the peak period for nitrogen use.
Farmers are also concerned by both the simultaneous and the very similar prices increases experienced from the fertiliser industry. In the hearing it was even suggested that the Commission Competition authorities should investigate.
The case for lifting import tariff barriers in Europe is no longer about protecting manufacturers from alleged unfair dumping, but about the survival of a healthy crop farming sector. It is a nonsense and not in the EU’s interest to impose duties on a scarce, essential farm input while the industry is cashing in comfortable profits.