Will Brussels Finally Hit Russian Fertilizers? Farmers Costs May Rise And Consumers Pay Higher Food Prices

11th February 2025

As the Ukraine war goes on yet another affect for European farmers is now in view. Reported by Rikard Jozwiak, Radio Free Europe/Radio Liberty.

The European Commission has finally decided to target Belarusian and Russian fertilizers. On January 28, the commission put forward a proposal to slap gradually increasing tariffs on the products over a period of three years, in order to price them out of the EU market.

It is not, however, certain if the proposal will be adopted and in what form. This is not a normal sanctions proposal, which usually requires unanimity among the 27 EU member states. This time it's a trade regulation that needs the approval of both the European Parliament via simple majority and the member states via qualified majority (55 percent of the member states representing 65 percent of the total EU population).

On the one hand, it makes it easier to pass as no single country can simply block it. On the other hand, it can also complicate the situation as two institutions are now involved. And that increases the opportunities for Moscow and Minsk to lobby in order to water down the proposal -- especially via the bloc's powerful agricultural lobby.

Deep Background: The main reason Brussels has been so reluctant to target Russian and Belarusian fertilizers is European farmers. They form an extremely strong lobby in many EU member states, as well as in Brussels, and the last thing they want right now is increased costs, which this proposal could lead to.

An EU diplomat speaking on background because they weren't authorized to speak on the record admitted to me the proposal could have come sooner to stop it being used as a political battering ram in the June 2024 European Parliament elections.

Russian and Belarusian fertilizers are competitive because of the abundance of cheap gas, which is used to make fertilizers, in these countries. In 2023, EU imports of fertilizers amounted to 14 million tons, out of which nearly 4 million came from Russia -- the single largest exporter of fertilizers to the bloc to the tune of 1.28 billion euros ($1.32 billion). That's money that at least partly goes to finance the Kremlin's war in Ukraine.

Fertilizer trade with Belarus was worth some 30 million euros, even though EU officials admit they often are unsure of where exactly the fertilizers were made due to the close economic ties between Minsk and Moscow.

Drilling Down

The EU could in practice diversify away from Belarus and Russia. Egypt and Algeria could fill the gap, but they would mostly likely be tempted to hike prices by arguing a big player had left the market, thus increasing demand.

There is also capacity to fill the gap with production inside the bloc, which essentially is the purpose of the European Commission's sanctions proposal: boosting the bloc's domestic industry and ensuring tighter food security. France, the Netherlands, and Poland would be able to step up, but then gas prices in the bloc would need to be lowered.

The question now is if this proposal will fly and, if so, how much will it be amended. Diplomats from a few member states that I have spoken to have said some capitals will demand the European Commission produce an impact assessment to see if these measures don't hurt the EU more than they do Belarus and Russia. That could delay the process -- and it's a sign member states aren't particularly keen on the measures in the first place.

The measures, though, aren't that hard-hitting to begin with. Russian and Belarusian fertilizers already face a general tariff of 6.5 percent. The commission's proposal is suggesting an extra fee of 40 euros per ton from July 1. Next year, that fee would rise to 60 euros per ton and then to 80 euros per ton in 2027, before shooting up to 315 euros in 2028, which essentially would make it too expensive to import.

The phase-in means Russia and Belarus won't really feel any economic pain anytime soon. With the war potentially ending, or at least being paused this year, there are even questions if these measure will even be introduced.

Then there is the possibility EU importers place lots of orders now when the price is still reasonable and hold off when the prices are higher, nullifying some of the effects.

There is also the issue of food scarcity in the rest of the world. The EU has been rattled by accusations from developing countries that a lack of food elsewhere has been caused by bloc's sanctions on Russia since the full-scale war in Ukraine broke out in February 2022.

Brussels has been adamant so far that sanctions on Moscow and Minsk aren't the cause of food shortages. The commission's proposal makes clear transit via the EU will still be possible and the EU buying less from Russia will mean there will be more fertilizers on the market available for countries in the developing world to buy.

For more news on the war and more go to https://www.rferl.org/
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