Addressing the need for available and affordable fertilisers

Fertilisers play a significant role for food security. Fertilisers can be mineral or organic. Their main nutrients are nitrogen, phosphorus and potassium. The EU depends on imports for 30%, 68% and 85% of its consumption of inorganic nitrogen, phosphates and potash nutrients respectively. Furthermore, at the peaks of gas prices this summer, gas had come to account for up to 90% of the variable production cost of nitrogen fertilisers. This has resulted in 149% increase in the price of these products for EU farmers in September 2022 compared with September 2021.

Purchases of fertilisers represent around 6% on average of the share of input costs and up to 12% for arable crops farmers. The objective of the EU’s Farm to Fork strategy is to reduce nutrient losses by 50% by 2030 while preserving soil fertility. The increase in prices has led farmers to buy and use lower quantities of fertilisers on their crops and to the temporary reduction of the EU’s own production. Fertiliser shortages can have short-term effects on yield. Lower agricultural yields mean less food.

This increases dependence on imports and market volatility exposes EU farmers and the European fertiliser sector. In the context of a global mineral fertiliser and energy crisis weighing on global food security and food prices, the European Commission adopted a Communication on 9 November 2022, which presented a wide range of actions and guidance on how to tackle the challenges that EU farmers and industry, as well as developing countries, are currently facing.

Supporting farmers to optimise their fertiliser use

The Communication outlines several best practices and ways ahead to help farmers optimise their fertiliser use and reduce their dependencies while securing yields:

• Critical sector: EU countries may prioritise the continued and undisrupted access to natural gas for fertiliser producers in their national emergency plans in the event of gas rationing.
• Targeted financial support: The amended Temporary Crisis Framework for State aid enables EU countries to provide specific support to farmers and fertiliser producers. Funds generated by measures such as the cap on the market revenues of certain electricity generators and the solidarity contribution can also be used, subject to the applicable conditions, for purposes of national support schemes.
• Improved market transparency: The Commission will launch a market observatory for fertilisers in 2023 to share data on production, use, prices and trade.
• Sustainable farming practices and training: The Commission will work with EU countries to ensure that relevant interventions such as nutrient management plans, soil health improvement, precision farming, organic farming, use of leguminous crops in crop rotation schemes, etc. are widely adopted by farmers. When needed, the Commission will invite EU countries to look into further prioritisation and increasing the ambition of such interventions in future revisions of their CAP Strategic Plans. Proper advice and training will also be provided to farmers, with the contribution of the new Farm sustainability tool for nutrients (FaST).
• More organic fertilisers: The substitution, whenever possible, of mineral fertilisers by organic fertilisers will reduce EU’s dependence on gas as well as the carbon footprint of the sector.
• Transition to greener fertilisers: The Commission will encourage EU countries to support investments in clean hydrogen and biomethane for ammonia production.
• Trade diversification: The Commission has reached out to alternative suppliers of fertilisers to compensate for previous supplies from Belarus and Russia. The Commission also proposed in July 2022 to suspend trade tariffs for ammonia and urea, used to produce nitrogen fertilisers.

The agricultural European Innovation Partnership (EIP-AGRI) also supports operational programmes relating to fertiliser use in EU countries, such as:

• Development of the production process of biological fertilisers (Italy): The aim is to develop and validate bio-fertilisers for herbaceous plant species and shrubs in order to improve soil fertility and reduce the use of mineral fertilisers, while maintaining productivity and improving yield quality.
• Technological, organisational, and marketing innovations in the field of fertilisation (Poland): the aim of this project is to produce technological, organisational, and marketing innovations for optimising fertilisation and irrigation using satellite data.
• Improving nitrogen efficiency (Germany): the aim of the project is to improve nitrogen efficiency in fertilisation in order to avoid harmful environmental effects.
• Integration of cover crops into field crop rotation (Slovenia): the project aims to integrate cover crops (winter legumes) into the field crop rotation at the farm.
• Operational group (OG) in smart agriculture in citrus irrigation and fertilisation (Spain): the aim of the project is to increase the efficiency in water and fertiliser usage.

Continuing the EU’s contribution to global food security

Farmers worldwide and notably those in vulnerable countries acutely feel the impact of the tight fertiliser market. In the international field, the Commission will continue its efforts to improve global food security by:

• Continue to work with its EU Members and European Financial Institutions, in a Team Europe approach based on solidarity, production, trade and multilateralism.
• Cooperate with selected EU partner countries, including through the Global Fertilisers Challenge, to reduce their dependence and consumption on imported mineral fertilisers.
• Improve global market transparency, by contributing to relevant international initiatives concerning fertilisers, in particular the G20’s Agricultural Market Information System (AMIS).
• Continue to work with EU Members to ensure that global trade in agri-food products, including fertilisers, is able to proceed smoothly.

Beyond fertilisers’ availability, affordability and use, the EU will continue to address the root causes of hunger, including conflict/insecurity, climate change, and economic shocks. It will do so by working with its international partners and EU Members to support the enhancement of local production capacities and the creation of sustainable and resilient food systems in the most fragile contexts.

More information

Communication and annexes: Ensuring availability and affordability of fertilisers

Q&A on the Communication on ensuring availability and affordability of fertilisers

Factsheet: Ensuring the availability and affordability of fertilisers

Please note that the information presented here is based on the currently available data (December 2022).

The European fertiliser industry operates in a global market as fertilisers are traded in large quantities between continents. It consists of more than 120 production sites located in the majority of EU countries. It employs 74,000 people (including in the supply chain) and had a turnover of €23.3 billion between 2017 and 2019.

The main producers in terms of production value are Germany, Poland, France and Spain. Ireland, Cyprus, Luxembourg and Malta have no production sites on their territory.

The average production of mineral fertilisers and intermediates used for fertiliser production during the period between 2019 and 2021 reached 40.3 million tonnes of intermediate and finished products and nutrients. Nitrogenous fertilisers represent the largest share of production with about 43% of the overall production while phosphatic and potassic respectively account for 3% and 10%. Mixed fertilisers (mixture of two or more straight fertilisers) account for 44% of EU production.

Since energy and fertiliser prices started surging at the end of 2021, several episodes of closures or curtailments of ammonia and fertiliser production sites took place in Europe (autumn 2021, spring 2022 and summer 2022) corresponding to peaks of natural gas price. During summer 2022, the capacity of ammonia production decreased by up to 70%, and since improved to reach around 50% in October 2022. The production in the fertiliser industry as a whole reduced moderately. In August 2022, the fertiliser production was 23% below the average of previous years (between 2017 and 2020), as production sites could source raw material from imports.

Trade in fertilisers represents 0.37% of total world trade, according to the Observatory of Economic Complexity (OEC).

Imports

In the period between 2019 and 2021, EU-27 countries imported an average of 26 million tonnes of mineral fertilisers annually. These were principally nitrogen based fertilisers (i.e. 10.4 tonnes for ammonia, urea, UAN, ammonium nitrate etc.), phosphate (7 million tonnes) and compound fertilisers, containing the three nutrients nitrogen (N), Phosphorus (P) and Potassium (K) (approximately 5.6 million tonnes).

High global fertiliser prices led to the decrease of imports since April 2022. However, imports of ammonia and nitrogen fertilisers increased by 34% above average in August 2022, due to the temporary decrease of production in the EU.

Exports

EU fertiliser exports amounted to 12.4 million tonnes yearly in the period between 2019 and 2021, including essentially nitrogen fertilisers (7.6 tonnes) and nitrogen, phosphorus and potassium (NPK) compound fertilisers (3.3 million tonnes).

The temporary reduction in EU ammonia and nitrogen fertiliser production from July 2022 led to a significant decrease in exports of ammonia and nitrogenous fertilisers. Exports dropped respectively by 30% and 24% in July 2022 and respectively by 69% and 59% compared to the previous year.

Global fertiliser prices decreased since their peak in April 2022, while not offsetting the increased suffered in 2021 and the beginning of 2022. World prices of urea were hit by a sharp increase in September 2022.

Nitrogen fertiliser prices increased by 149% between September 2021 and September 2022 in the EU. The price of mined fertilisers also increased by 63% and 90% respectively over the same period. Prices of nitrogen fertilisers increased sharply following peaks of natural gas, being the feedstock for the nitrogen fertiliser production while the price of mined fertiliser is less affected by natural gas prices.

Over 11 million tonnes of nutrients (nitrogen and phosphorus) are used in EU agriculture. The consumption of synthetic nitrogen fertilisers remained relatively stable from 2000 until 2018 while the consumption of mineral phosphorus fertilisers decreased from around 1.6 million tonnes in 2000 to 1.2 million tonnes in 2018.

EU aggregated data  on nutrient balances let us examine the source nutrient inputs in the EU, namely nitrogen and phosphorus. Inorganic fertilisers represent around 40 to 45% of nutrient inputs, while phosphorus manure is represented in a larger proportion. In the case of nitrogen, other inputs from leguminous crops for example play a significant role.