EU covers fertilizer crisis: farmers can reduce nitrogen application for 2027 harvest

European farmers may reduce their nitrogen fertilizer applications for the 2027 crop due to a sharp increase in gas and fertilizer prices after the escalation of the war in Iran and the closure of the Strait of Hormuz. This is reported by Politico.

According to the publication, after the closure of the Strait of Hormuz, gas prices in Europe increased by 59%, and some types of fertilizers by up to 50%. In Germany, urea, the most traded type of fertilizer, costs about €550/t compared to about €370 before the war.

According to the European Commission, spring sowing in the EU is mostly provided with fertilizers, since many farmers bought them before the crisis. At the same time, farmers are now placing orders for autumn sowing, and the economy is deteriorating for them: wheat prices remain at about pre-war levels, while fertilizer costs have increased significantly.

Because of this, some farmers may reduce nitrogen applications or switch to crops that require less fertilizer. Both scenarios could lead to lower harvests in 2027 and further increases in food prices.

“Most of the products currently on supermarket shelves were produced using resources purchased or contracted before the crisis fully unfolded. The current stability largely reflects timing, not immunity,” explained David Laborde, Director of the FAO’s Agricultural Economics Division.

The European Commission is preparing an action plan on fertilizers, which is due to be presented on May 19. It includes four areas: reducing import dependence, increasing domestic production, developing low-carbon alternatives and helping farmers use fertilizers more efficiently.

At the same time, Politico notes that such solutions will not have a quick effect: the construction of a new fertilizer production plant takes 3-4 years, and fertilizer production in the EU is already 19% below 2019 levels.

An additional pressure factor could be the EU’s carbon border mechanism, CBAM, which will apply to fertilizer imports from countries with softer climate rules from January 1. Italy and France are in favor of suspending it for fertilizers, while Poland and Germany, where large nitrogen plants are concentrated, want to keep the mechanism.

Tags: fertilizers