Cheap urea and fertilizers versus local production: the position of producers and farmers

Imports of fertilizers, including urea, from Russia and Belarus have been controversial in Poland and the European Union for years. Cheap products from the East, although attractively priced, are becoming a serious challenge for domestic producers such as Grupa Azoty, which are increasingly raising the alarm about the destructive impact of dumped prices on the local market. Fertilizer import policies are generating much debate among both farmers and EU government representatives, who are trying to balance protecting their own industries with ensuring the availability of affordable products.

Poland, like other EU countries, is taking steps to limit the flow of fertilizer from Belarus and Russia. The introduction of sanctions, such as the freezing of the assets of Belarusian company NFT LLC, and proposals to impose tariffs on imported fertilizers are a response to concerns about the market’s dependence on cheap supplies from the East. At the same time, these measures risk raising prices for farmers and destabilizing the agricultural market, leading to divided opinions among various interest groups. However, the problem is not limited to Poland – the entire European Union is grappling with the challenge of securing the market from unfair competition while maintaining product availability.

MBF Group SA, as a rapidly growing importer of fertilizers, offers alternative solutions. By working with suppliers outside the sanctioned regions, the company can supply urea and other fertilizers from countries not suspected to be from Russia or Belarus. This approach makes it possible to meet the needs of farmers in Poland and the European Union, while supporting the policy of supply diversification, which is crucial in view of the changing geopolitical and economic situation.

Restrictions and Sanctions. Imports and Customs

In 2023, Poland imported 276,000 from Russia. tons of urea, which accounted for more than 30% of all imports of this fertilizer. Compared to 2022, these imports increased by 130,000. Tone. Poland’s Ministry of Development and Technology has taken steps to introduce a 30% duty on fertilizer imports from these countries, with the aim of reducing the EU’s dependence on supplies from Russia and Belarus. In the first half of 2024, fertilizer imports from Russia totaled 717,000. tons, an increase of 47% compared to the same period last year. The increase in fertilizer imports from Russia, despite sanctions and geopolitical tensions, indicates the strong dependence of the Polish and European markets on cheaper products from the East.

Plans and actions of the Polish government

The Polish government and the Baltic states (Lithuania, Latvia, Estonia) have asked the European Commission to impose tariffs on fertilizers from Russia and Belarus. The joint letter underscores the need to increase tariffs and take decisive steps to protect local producers from the influx of cheaper fertilizers from the east.

In addition, the National Tax Administration has launched measures to block Belarusian fertilizer exporting companies by placing them on sanction lists. The National Tax Administration (KAS) has found a way to restrict fertilizer imports from Belarus and Russia. On the initiative of the head of KAS, the Belarusian urea exporter NFT LLC was added to the Polish sanctions list in late November. NFT LLC has frozen assets in Poland, and the justification points out that the company is merely an intermediary for Belarusian producer Grodno Azot, which has already been sanctioned. KAS suspects that through such intermediaries, Grodno Azot is circumventing restrictions.

The measures are intended to limit the revenues of Alexander Lukashenko’s regime and stem the flow of cheap nitrogen fertilizers, which dominate the market in the region thanks to their large scale of production. Exports are crucial to Grodno Azot’s profits, so sanctions are expected to weaken their position.

Arguments against the introduction of tariffs on imports from Russia and Belarus

1. Fertilizer price increase

One of the most important arguments against the introduction of tariffs is the fear of rising fertilizer prices on the European market. The introduction of additional fees may lead to increased costs for farmers, which will negatively affect the competitiveness of their production. In the long term, this could result in food price hikes, which is particularly unfavorable in the context of global food crises.

2. Dependence on imports

Critics of the tariffs point out that the European Union already relies heavily on fertilizer imports from Russia and Belarus, and the introduction of tariffs could only exacerbate problems with availability. If supplies from the East were to be halted, the European market would face a serious crisis due to shortages of key products for the agricultural sector. Such a scenario could lead to even higher prices as a result of limited supply and the need to seek more expensive alternatives. Dependence on imports is not only due to the low prices of Russian and Belarusian products, but also to the lack of an adequately developed production infrastructure in Europe, which requires long-term investment before the importance of imports can be reduced.

3. Problems with domestic production

Some experts point out that domestic fertilizer production capacity is underutilized, and the introduction of tariffs will not necessarily improve the situation for local producers. In the short term, this could lead to a further weakening of the domestic fertilizer sector, which is unable to compete with cheaper products from the East.

4. Concerns about competitiveness

The introduction of tariffs on fertilizer imports could significantly reduce the competitiveness of European agriculture in the global market. Rising production costs due to higher fertilizer prices could lead to a decline in European agricultural exports, which will become less attractively priced compared to cheaper alternatives from other regions of the world. In addition, higher costs can limit farmers’ investment opportunities, slowing the development of modern technology and innovation in the agricultural sector, which are key to maintaining productivity and sustainability. As a result, European agriculture may lose its leading position in the global market, negatively affecting the entire economy of the region.

5. Alternative sources of supply

Critics also point to the need to diversify import sources, and not necessarily to impose tariffs. Instead, they propose developing local fertilizer production and seeking alternative suppliers outside Russia and Belarus, which could reduce the risks associated with dependence on those countries.

In conclusion, opponents of imposing tariffs on fertilizer imports from Russia and Belarus argue that such measures could lead to negative economic consequences for farmers and the entire agricultural sector in the European Union.

Poland and EU plans to reduce urea and fertilizer imports from Russia and Belarus

Introduction of tariffs

Poland, in close cooperation with the Baltic states (Lithuania, Latvia and Estonia), has submitted a joint request to the European Commission to impose a 30% tariff on fertilizer imports from Russia and Belarus. These measures are aimed at reducing the European Union’s growing dependence on these supplies, which have increased significantly in recent years. In 2024, fertilizer imports from Russia totaled more than 721,500. tons, a significant increase compared to previous years.

Diplomatic action

The Ministry of Development and Technology in Poland has been conducting intensive diplomatic efforts to gain support for the introduction of tariffs at the EU level. The joint letter to the European Commission was delivered on November 20, 2024, and some member states said they were ready to support the initiative.

Protection of the domestic market

The Polish government also plans to strengthen protection for local fertilizer producers by introducing an importer registration system and expanding existing control mechanisms. The proposed changes are aimed at sealing the market against illegal imports and circulation of fertilizers

Alternative sources of supply

As part of long-term strategies, Poland and the European Union are taking concrete steps to diversify sources of fertilizer supplies to reduce dependence on Russia and Belarus. These activities include:

1. Expanding cooperation with countries outside Europe. Poland and the EU are engaged in trade negotiations with key fertilizer exporters from regions such as Central Asia (e.g. Kazakhstan and Uzbekistan), South America (Brazil and Chile), and North Africa (Egypt and Morocco). These countries have significant raw material resources to meet European needs. Of particular interest are phosphate and potassium fertilizers, which could partially replace Russian and Belarusian products.
2. Investment in the development of domestic fertilizer production. Poland plans to support local fertilizer producers by offering tax breaks, subsidies for plant modernization and preferential loans. The goal is to increase domestic production of urea, ammonium nitrate and other fertilizers commonly used in agriculture. Similar initiatives are being considered at the EU level, where dedicated funds are planned under the Common Agricultural Policy (CAP).
3. New fertilizer production technologies. The EU is investing in research into modern fertilizer production methods using renewable raw materials or industrial waste. Technologies such as “green hydrogen” can play a key role in reducing dependence on imported raw materials. An example is the development of nitrogen fertilizers based on low-carbon processes that could reduce the chemical industry’s environmental impact.
4. Improving logistics and import infrastructure. To facilitate fertilizer imports from new markets, Poland and the EU plan to invest in expanding seaports, warehouses and transportation networks. Special attention is being paid to the Baltic as a strategic direction for transporting raw materials from Asia and Africa.

These measures aim to ensure stable and diversified sources of fertilizer supply, which will not only strengthen food security in the region, but also contribute to building a more sustainable and resilient agricultural sector in Poland and the EU.

Polish government’s views on fertilizer imports from Russia and Belarus

The Polish government is expressing serious concern over rising fertilizer imports from Russia and Belarus, which have reached record levels. State Assets Minister Jakub Jaworowski is sounding the alarm that cheaper products from the East are destabilizing the Polish fertilizer market, accounting for as much as 56% of domestic demand. Such a large influx of imported fertilizers weakens the competitiveness of Polish producers, forcing them to reduce production and limiting investment in modern technologies.

To counter these problems, the Polish government is advocating the introduction of protective duties of at least 30% on fertilizer imports from Russia and Belarus. Such a customs barrier is intended to level the playing field for domestic producers and protect them from unfair price competition. In parallel, the Ministry of Development and Technology, together with the Ministry of State Assets, is stepping up efforts at the European Union to gain support for these measures. The EU’s customs policy is still too lenient, which the Polish government believes does not adequately protect the Community market.

The activities of national authorities, such as the National Tax Administration (KAS) and the Internal Security Agency (ABW), also focus on monitoring illegal practices, including the circumvention of sanctions by Russian and Belarusian companies. These mechanisms are being used to further flood the Polish market with cheap fertilizers, which could have negative consequences for Poland’s economic security. The government is emphasizing early detection and blocking such practices.

Poland is actively working with neighboring EU countries such as Lithuania, Latvia and Estonia to increase pressure on the European Commission to tighten regulations on fertilizer imports from the East. Joint initiatives include. Raising tariffs and introducing additional safeguard mechanisms, such as dumping price monitoring. The government stresses that such measures are necessary to secure the long-term development of the domestic chemical industry and reduce dependence on eastern suppliers.

Polish farmers’ opinions on urea and fertilizer imports from Russia and Belarus

Polish farmers appreciate the opportunity to buy cheaper fertilizers imported from Russia and Belarus, especially in difficult times for the agricultural sector. The lower prices of these products make it possible to reduce production costs, which is important with rising expenses. But experts such as Szymon Domagalski of the Polish Chamber of Chemical Industry warn that dependence on supplies from these countries could bring long-term risks, including greater market vulnerability to price fluctuations and political pressure.

Despite the price advantages, farmers express concerns about the quality of fertilizers from Russia and their potential impact on the Polish market. The increase in imports could lead to a weakening of domestic production, which could result in higher prices and limited availability of fertilizer in the future. In addition, there are doubts about the handling and repackaging of Russian fertilizers in Poland, which makes it difficult to verify their origin and quality parameters.

Urea and fertilizer suppliers from Africa and Asia

Polish farmers also note the importance of diversifying fertilizer supply sources to become independent of products from Russia and Belarus. Many emphasize that while currently cheaper fertilizers from these countries are a short-term solution, in the long term it is necessary to develop local production and seek alternative suppliers, for example from Asia, South America or Africa. Such an approach could not only reduce the risks associated with dependence on one region, but also have a positive impact on the stability of the fertilizer market and protect domestic producers from the negative effects of excessive imports.

Western European farmers’ opinions

Concerns about pricing and availability

Farmers in Western Europe are increasingly expressing concern about potential increases in fertilizer prices and their limited availability if tariffs are imposed on products from Russia and Belarus. In particular, small producers, for whom fertilizer costs account for a significant portion of expenses, are concerned about their competitiveness in the market. An increase in fertilizer prices could affect not only farm profitability, but also the stability of the entire agricultural market, including food security in the region. Against the backdrop of increasingly frequent weather anomalies and growing environmental demands, access to affordable fertilizers is critical to maintaining production continuity.

Support for domestic producers and development of local production

On the other hand, many farmers support measures to protect domestic fertilizer producers from unfair competition from cheap imports from the East. Price dumping by Russian and Belarusian companies often leads to market destabilization and displacement of local companies, which in the long term threatens dependence on imports. Farmers in Western Europe emphasize the need for increased investment in local production facilities that could provide fertilizers tailored to specific regional needs. The development of modern fertilizer technologies and support for research into alternative fertilizer methods could further reduce dependence on external suppliers.

Diversification of supply sources and sustainable development

One of the main demands of farmers is the need to diversify fertilizer supply sources. Instead of relying on countries with unstable political situations or aggressive pricing policies, they suggest looking for suppliers from other regions of the world, such as South America, Africa or Asia. Introducing such measures could ensure greater price stability and fertilizer availability. At the same time, farmers are calling for the development of technologies that support sustainable agriculture, such as biotechnologies and precision fertilizer systems that reduce the amount of fertilizer needed while increasing efficiency.

The discussion of fertilizer imports from Russia and Belarus in Western Europe reflects the complexity of the problem. Farmers are concerned about the economic impact, such as price increases and reduced availability of fertilizers, but at the same time recognize the need to protect local producers and invest in the development of independent, modern production sources. It is crucial to introduce comprehensive measures at the EU level that balance the interests of farmers and producers, while promoting the sustainable development of the agricultural sector.

Summary and final conclusions

Imports of fertilizers, including urea, from Belarus and Russia are a pressing issue for both Poland and the European Union as a whole, demonstrating the complexity of the problem of balancing competitiveness and economic security. While cheap products from the East allow farmers to cut production costs, they also undermine the stability of local producers, threatening their future. The introduction of sanctions, such as blocking the assets of Belarusian companies and proposals to impose protective tariffs, is aimed at reducing dependence on these supplies and protecting the European market from price dumping.

At the same time, farmers and EU governments, concerned about rising fertilizer prices and limited availability, are calling for diversification of supply and support for local producers. In this dynamic situation, MBF Group SA is becoming an important player, offering the opportunity to import fertilizers from alternative markets, which not only supports the stability of the agricultural sector in Poland and the EU, but also fits in with strategies to reduce dependence on sanctioned countries. As a result, the company plays a key role in providing solutions that combine farmers’ needs with geopolitical and economic requirements.