Debate: The urgent need for an EU strategy on fertilisers to ensure food security in Europe
Date: THURSDAY, 6 OCTOBER 2022
Speaker: Janusz Wojciechowski
Language: EN

Maintaining appropriate supply and affordability of fertilisers is absolutely crucial. In Europe, nitrogen fertiliser prices increased 149% in one year between September 2021 and September 2022. The price of mined fertilisers also increased by 59% and 90% respectively over the same period. Nitrogen fertilisers are a particular concern. Simply put, as gas constitutes the main input for the production of nitrogen fertiliser, the high cost of gas has forced fertiliser companies to reduce their ammonia—based production by shutting it down or reducing it by up to 70%. This has not yet resulted in a significant shortfall in supply, as this has been compensated by higher imports, mostly from more reliable trade partners: Morocco, Canada, Egypt. We clearly have to be sensitive to the risk of replacing one dependency with another. At the same time, in the current situation, these higher imports are easing supply pressure, but unfortunately are not solving the actual cause of the problem: the gas prices crisis. High and unstable fertiliser prices are a challenge not only for producers but also for farmers – and first of all for farmers. There are indications that European Union farmers have ordered less fertilisers than usual this summer. The magnitude of the reduction may be around 20%. Farmers are also concerned that output prices might not keep up with their input prices, squeezing their incomes. Given all this, we will need to remain very attentive to the risk of lower yields and its influence on prices of food affecting the budgets of European families. In short, lower yields would result in further food inflation. We therefore need to strengthen our domestic fertiliser sector to make it more autonomous and reliable. We also need to strategically reduce our dependence on imports in this sector. It is not ideal that we continue to depend on Russian imports of urea, for example. The Commission has already taken measures to help ease the pressure on farmers. Some of these measures do also have beneficial effects on the fertiliser industry. To name the most relevant, there was the exceptional support package of March 2022, mobilising the crisis reserve, of over EUR 500 million, and enabling farmers to face the higher input costs, including for fertilisers. A special measure similar to the COVID one was created under the second pillar of the CAP, where up to 5% of the Rural Development Fund uncommitted in the year 2021—2022 could be mobilised to aid farmers and rural businesses. This has a firepower of about EUR 1.5 billion. There is another ad hoc temporary crisis framework for state aid which the Commission also adopted in March 2022, reinforced in July, and which provides that farmers are eligible for support to EUR 62 000. Fertiliser producers are eligible for support too under this temporary framework. President von der Leyen has announced the prolongation of this framework, and the maximum amount of support under the state aid ad hoc framework will be reviewed in the coming days. The winter preparedness package provides for Member States to give priority as regards energy gas availability to relevant sectors, including fertilisers. Moreover, as part of package of emergency measures in the energy sector, the Commission has proposed a temporary solidarity contribution on surplus profits generated from activities in the main energy segments. These funds of up to EUR 114 billion could mitigate the high energy prices to households and energy intensive industries, including the fertiliser sector. On the trade policy side, the Commission has proposed to the Council a temporary suspension of the custom tariffs for two key intermediate goods used in the production of nitrogen fertilisers, namely ammonia and urea. This is now being discussed in the Council formations. The Member States’ CAP strategic plans are, and will be in the future, the key tools to support sustainable farming and incentivise reduced use of fertilisers. In the observation letters regarding the CAP strategic plans, we promoted incentives for Member States to prioritise the uptake of precision farming, to optimise the efficiency of plant nutrition and to enhance the use of alternatives to mineral fertilisers, including organic fertilisers, without sacrificing yields. We have encouraged our Member States both in the observation letters and in their CAP strategic plans to focus on fertiliser—saving measures that should not result in lower yields. In the draft plans, we have recorded 28 interventions in 17 Member States whose main practice is nutrient management using either eco—schemes or agro—environmental climate payments. As regards precision farming, we have recorded nine interventions in the CAP plans in eight Member States, mostly supported under eco—schemes. We will also step up our agricultural knowledge and innovation system to help farmers with their uptake, their measures in their CAP strategic plans. The CAP farm advisory system will be useful in this regard. Advisors could support farmers to adopt less fertiliser—demanding varieties and crops, and manage better the use of inputs. Our fertiliser industry is itself well under way in its efforts to switch to the production of low carbon ammonia and other circular nutrient sources. We must support its efforts, as it is crucial for food security to have a viable and sustainable fertiliser industry in our Member States. At the same time, we have to consider the international context. Fertilisers are globally traded, which provides benefits to our farmers in case of need, but requires that our regulation ensure the competitiveness of our own domestic industry. This will be particularly important during the transition to green fertilisers in Europe. Honourable Members, there are also concerns over global fertiliser availability and affordability. Russia hinted at European Union responsibility in such risks, notably through our sanctions. We have to be very clear on this. Nothing in our sanctions is aimed at preventing Russia to export fertilisers. There is clear evidence that Russian exports of fertiliser to third countries have not decreased a lot and can still be exported to the EU. The Commission is also engaged in international cooperation actions such as a global fertiliser challenge. In conclusion there is a potential in the new common agricultural policy and the toolbox it provides. We need well—functioning and autonomous domestic production of fertilising products. It is in the agricultural sector’s own interests. In fact, the fertiliser sector forms an important part of our food system, and we need to work towards its independence and resilience to outside disturbances.  On our way to a sustainable future, we will ensure that food security is maintained, including in the global context. Honourable Members, I have a direct answer to your question about the future strategy. The Commission is ready to put forward a communication on fertilisers. It will cover both internal and external dimensions, food security and greening aspects. It will  Ladies and gentlemen, thank you again for your inspiration. We need a clear vision of how to ensure, in this crisis situation, the economic security of our farmers and, first of all, food security for our society.