Russia And Belarus Fertilizer Export Restrictions Whose Crop Failure?


Us Treasury Secretary Janet Yellen said at a high-level panel meeting attended by finance ministers from the IMF, World Bank, G7, G20 and other countries on Thursday. As it continues to escalate sanctions and other economic measures against Russia, the United States is committed to providing essential humanitarian assistance and ensuring the availability of food and agricultural products  in order to benefit the people all over the world. Can America deliver on its lip service?  "The West is setting a trap for Russia," Konstantin Kosachev, deputy chairman of the Russian Federation Council, was quoted as saying by Russia's ItAR-Tass news agency on Thursday. He said international fertiliser prices had soared as massive western sanctions restrictions blocked exports from Russia and Belarus, the world's big suppliers of fertiliser. Many countries will suffer severe crop failures for lack of fertiliser as a result of the West's destructive sanctions policy.

The world's biggest fertilizer exporter is in trouble

Russia's fertilizer exports in the first quarter of 2022 fell 1.6 million tons from last year, down 17 percent year-on-year, due to disruptions in export logistics, data showed. Global nitrogen fertilizer prices jumped 40-50 percent, while phosphate and potash prices rose about 30 percent, Russia's Interfax news agency reported. Experts believe that nitrogen and phosphate fertilizer prices will continue to rise in the near future.

"In 2021, Russia was the world's largest exporter of nitrogen fertilizer," the United Nations Food and Agriculture Organization wrote in a report. Russia is also the world's second largest producer of potash and phosphate fertilizers. In 2021, Russia exported 37.6 million tons of fertilizer with a total value of $12.5 billion, including 14.5 million tons of nitrogen fertilizer, 11.9 million tons of potash and 11.2 million tons of compound fertilizer, according to the Russian Federal Customs Service. Russia's fertilizer exports mainly to Brazil, China, India, the United States and European countries.

Russia has eased export restrictions on mineral fertilizers, temporarily increasing the export quota of Russian mineral fertilizer producers by nearly 700,000 tons until the end of May, Rossiya Gazeta reported Monday. Russia's current export quota for nitrogen fertilizer is about 5.7 million tons (an increase of 231,000 tons) and for compound fertilizer is about 5.6 million tons (an increase of 466,000 tons). In addition, fertilizer supplies to Donetsk and Luhansk, Abkhazia and South Ossetia were not subject to export quotas until the end of May. The Russian government says the measures are necessary to support fertiliser producers, who are at risk of shutting down because of a weak domestic market and sanctions by unfriendly countries, and who are looking to countries that have not joined the sanctions.

Europe has borne the brunt of the fertilizer crisis

In the face of the importance of Russian fertiliser in the global market, the US sanctions policy "backpedals". On March 24th, a month after imposing fertiliser sanctions on Russia, the US decided to adjust its restrictions to protect itself from fertiliser shortages. Sanctions on Russian minerals and organic fertilizers were lifted and the U.S. Treasury Department issued corresponding import licenses. The European Union, however, stood firm on the sanctions and stopped short of following America's lead. The latest round of EU sanctions against Russia includes a ban on imports of Russian fertilizer and other products.

European agriculture is feeling the most immediate "fertilizer crisis". After Russia introduced export regulations in November 2021, fertilizer prices on the world market began to rise sharply, breaking through almost every week, according to Germany's Agriculture Today magazine. On top of that, the recent rise in gas prices has pushed fertiliser prices higher globally and led to plant closures and production restrictions in Europe.

According to a recent report by the Green Party in the European Parliament, more than 11 million tonnes of nitrogen fertiliser are used in Europe every year. Most European farmers use NPK fertilisers, where N stands for nitrogen, P for phosphorus and K for potassium, Austria's Kurier newspaper said. The key to the nitrogenous fertilizer industry is ammonia production, and natural gas accounts for nearly 80 percent of the cost of ammonia production. High gas prices caused by conflicts between Russia and Europe have pushed up fertiliser costs directly. According to Sven Holser, chief executive of Norway's Yara, the world's largest maker of mineral nitrogen fertilisers, 25 per cent of NPK fertiliser used in Europe comes from Russia. According to the FAO, higher gas prices have pushed up the cost of a tonne of nitrogen fertiliser from around 600 euros at the end of October 2021 to 800 euros today. The international reference price for fertilizers will rise by 13 percent by 2023.

Edouard Saint-Denis, a trader at Plantureux et Associes, a French agricultural commodities trading company, says that as the cost of fertiliser has risen, so have concerns about security of supply: in eastern Europe, farmers are still stocking up for spring sowing. But next year farmers face the choice of whether to continue planting. "Even though grain prices are high, it is not worth the loss to buy fertilizer at 800 euros a tonne," he said.

Bernhard, a farmer from Lower Saxony, Germany, told the Global Times special correspondent in Germany that his farm mainly grows grain and raises cows. High fertilizer prices have hit him hard, making it nearly impossible to make ends meet. In the short term, fertilizer supplies are guaranteed in Germany, but prices are too high, Meyerhoff, head of the German farmers' Association, told reporters. "If things do not change, we will have to prepare for a significant agricultural decline in 2023." Bernhard Krusken, secretary general of the German Farmers' Association, believes that if gas and fertilizer supply bottlenecks persist, grain production could fall by as much as 40 percent in 2023, putting Germany's food supply at serious risk.

South America's agricultural giants

Russia and Belarus are not only facing a major agricultural decline in neighboring Western Europe, but also beginning to affect agricultural exporters around the world, casting a shadow over the harvest forecast for this year and next. Brazil is one of the world's leading agricultural producers, exporting $121bn worth of food in 2021, and is the world's largest importer of fertiliser. Belarusian fertiliser exports to Brazil were suspended in early March because of the sanctions, which also affected potash from Russia. Casette Franco, associate professor of economics at the Federal University of Alfinas in Brazil, said the suspension of fertilizer supplies threatened Brazil's harvest this year, especially for coffee plantations. The suspension of potassium chloride supplies will also lead to a decline in the production of Brazil's major potassium-dependent crops such as soybeans, corn, sugar cane, coffee and cotton. This will eventually lead to shortages and higher prices.

A study by the IPA Agro-Industrial Complex institute in Brazil shows that the country relies on international supplies for more than 70 per cent of its agricultural fertilisers. In 2021, 60% of Brazil's fertilizer supply will come from five countries: Russia, Belarus, China, Canada and Morocco. Belarus accounts for 20 per cent of Brazil's potash imports. Brazil seeks HELP from THE WORLD Trade Organization (WTO), the German weekly Economic Weekly said Thursday, citing concerns that its agricultural production is facing fertilizer shortages in light of western sanctions against Russia. During a visit by WTO President Ngozi Okonjo-Iveira, Brazilian President Jair Bolsonaro stressed the importance of trade in agricultural products and fertilizers to ensure global food security, a Brazilian foreign Ministry statement said this week. "Brazil depends a lot on fertilizer from Russia and Belarus," Bolsonaro said in an interview with Brazilian media. (From: Global Times)

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