Energy crisis in Europe: the use of fertilizers is hampered by the energy crisis in Europe

The energy shortage that limits fertilizer production in Europe threatens to force the world’s farmers to use even fewer of the nutrients essential to growing food.

Soaring gas prices, an essential raw material, have already reduced Europe’s nitrogen fertilizer capacity by a quarter, estimates the CRU group. Now concerns are growing that the crisis is worsening. For Europe, this could mean even less production and more dependence on imports of ammonia, from which nitrogen products are made.

It will also have an impact elsewhere. Faced with higher prices and tighter supplies, farmers could cut their global fertilizer use by up to 7% next season, the most since 2008, warns the International Fertilizer Association. This risks hampering harvests as the world grapples with a cost-of-living crisis and worsening hunger.

“If European farmers import more products from other exporters, then for the more fragile agricultural markets in sub-Saharan Africa, South Asia and parts of Latin America, it will tighten the global market,” said Laura Cross, Director of Market Intelligence at IFA.

The biggest drop in fertilizer use next season will occur in sub-Saharan Africa, with a drop of up to 23%, according to the IFA.

After faltering in previous months, fertilizer prices have started to rise again, with gas recovering thanks to reduced supplies from Russia and European heat waves that have fueled demand.

European fertilizer manufacturers have been hardest hit by high gas prices. The global sector has also had to deal with sanctions from the United States and the European Union on potash sales from Belarus and China’s decision to limit shipments. Additionally, the Russian nutrient trade has suffered from self-sanctioning by many shippers, banks and insurers and difficulties in servicing Russian exports.

european misfortunes

According to CRU, it is currently much cheaper to import ammonia into Europe than to produce it there.

“I don’t see how anyone is still producing in Europe, other than those who have covered” the gas costs, said Chris Lawson, fertilizer manager at CRU. “We expect ammonia prices to continue to rise.”

Europe – which produces around 20 million tonnes of ammonia a year – needs to import an additional 200,000 tonnes a month to ease the crisis, according to Lawson. Some relief could come from shipments from the Black Sea region in the coming months, he said.

Soaring gas prices since June mean “the cuts and shutdowns are happening again”, said Lukas Pasterski, spokesman for industry body Fertilizers Europe. “In principle, this would lead to increased imports, but a lot depends on the availability and price of fertilizers on the world market.”

For now, the nitrogen market will remain very tight, Bert Frost, senior vice president of sales at leading producer CF Industries Holdings Inc, said last week. Limited supply means food shortages perhaps more later this year and into 2023, he said.

The crisis closed or reduced production at 10 of Europe’s fertilizer factories in July alone, and things could get worse from here.

The CRU said the amount of the region’s nitrogen capacity that has been reduced – currently by at least 25% – is likely to increase. Fertilizer makers Yara International, K+S AG, Borealis AG and Fertiglobe Plc also recently warned of new production restrictions across Europe.

Concerns are growing over the lack of fertilizer for next year. Sean Finan, who runs a beef farm in County Roscommon in Ireland and needs nutrients for his pastures, is among those considering stocking up earlier than usual.

“Everything indicates that the prices will be high,” said Finan, who could accept an incentive grant from his cooperative. “Availability would also be an important factor. I don’t want to be stuck in a waiting list in February when I have to apply.

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