The first shock was that of the outbreak of grains and oils, the second is that of fertilizers: the war in Ukraine cast a harsh light on the dependence of European agriculture on Russian gas, the first ingredient of synthetic fertilizers.
The Russian government has already recommended that its fertilizer producers suspend their exports. The stakes are high for the European Union, which imports both gas and fertilizer from Russia.
What is Fertilizer?
Fertilizers contain nutrients to nourish plants and promote their development. They can be of organic origin (nettle manure, slurry, chicken droppings, etc.) or of mineral origin: made from nitrogen (N) in the air or minerals extracted from the subsoil. such as phosphorus (P) and potash (K).
The vast majority of European farmers use "NPK" mineral fertilizers, particularly nitrogen ones. The International Fertilizer Association (IFA), which brings together the global fertilizer industry, estimates that 85% of soils in the world lack nitrogen, an element "engine of plant growth".
Nitrogen fertilizers are made from ammonia, obtained by combining nitrogen from the air and hydrogen from natural gas. Nearly 80% of the cost of producing ammonia is linked to the use of gas. There are several types of these fertilizers: in liquid form (nitrogen solution) or granules (ammonium nitrate and urea).
A double dependence
"In 2021, Russia was the leading exporter of nitrogen fertilizers and the second-largest supplier of potassium and phosphorus fertilizers," recalls the Food and Agriculture Organization of the United Nations (FAO).
"40% of European gas supply currently comes from Russia", which provides "25% of European supply" in nitrogen, potash, and phosphate, warned on March 1 Svein Tore Holsether, boss of the Norwegian Yara, the first producer world of mineral nitrogen fertilizers.
The European Union consumes "more than 11 million tonnes of synthetic nitrogen" every year according to a recent report by environmental MEPs. It, therefore, depends on Russia both for its gas and its direct imports of fertilizers, Brazil remains the leading importer of Russian nitrogen fertilizers.
Price spike continues
The price of mineral fertilizers has continued to rise, in the wake of the surge in natural gas. "Prices of urea, a key nitrogen fertilizer, have more than tripled in the last twelve months," according to the FAO.
The Russian invasion in Ukraine has again boosted the price of gas and the nitrogen solution, which cost around 600 euros per ton at the end of October on the European market, has now reached 800 euros, "a record", underlines Isaure Perrot, a consultant at the Agritel office.
Under these conditions, Yara announced that it was temporarily reducing its production in France and Italy, and its president considered it "crucial" that the international community "work to reduce dependence on Russia".
The possible risk of a shortage is still supplanted by the fear of supply capacities in view of the astronomical costs of fertilizers: "In Western Europe, farmers are generally covered for spring sowing, but the question arises for the 2023 campaign", alert Edward de Saint-Denis, the broker at Plantureux and associates.
Today, and "despite the rise in cereal prices, it is not profitable to buy fertilizer at 800 euros per tonne", adds Isaure Perrot.
Europe will have to turn to other sources: "There is gas in Algeria, in the United States - but at what price? - and also in Iran or Kazakhstan - but will we want to buy at this country?”, asks Ms. Perrot.
For potash, nearly 40% of which is imported from Russia and Bioelorussia, Europe could turn to Canada, which is already its main supplier, but at higher prices, or to Israel and Jordan, believe grain brokers.
The EU could also increase its phosphate inputs, of which China, Morocco, and the United States are the main producers, but, he stresses, this will not replace nitrogen, on which high European yields are based.
For Isaure Perrot, alternative avenues will be dug if the crisis persists, such as a modification of crops, favoring legumes, sunflower, or soybeans, which consume less nitrogen than wheat and corn.
For its part, Yara wants, from 2023, to produce 30% of its ammonites from the hydrolysis of water – and not gas. A "green hydrogen" is still very expensive but would make it possible to overcome both fossil fuels and dependence on Russian gas.