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Struggling EU Farming Community Dreads Skyrocketing Inputs Costs

Summary

New regulation regarding the composition of fertilizers.

The odds of this regulation coming through may seem unlikely, but Russia’s lobbying is hard.

Amidst an ocean of highly technical, sensitive and inflexible European regulations, farmers are often left helpless to keep their businesses afloat. In such an intricate system, the butterfly effect is multiplied, and the slightest oversight or carelessness can have devastating effects, as European agricultural companies may soon find out, if the EU gives the go-ahead on a new regulation regarding the composition of fertilizers.

The least one could say is that European farmers are not short on struggles and challenges. In its most recent development, the European Environment Bureau has addressed a letter to the negotiations parties (which include the EU Commission, Parliament and presidency), requesting that further regulations be placed on fertilizers.

According to the FAO, 4.5 million tons of phosphate are used every year in Western Europe, with European countries enriching their soil with 30 to 100 kg of fertilizer (all types included) per hectare, every year. Most of those fertilizers are based on phosphate. If regulations regarding fertilizers are modified, they can throw off balance the already-fragile farming industry in Europe.

The new threat farmers may be facing is Russia’s push for tough controls on phosphate-based fertilizers. Moscow wants to beat the regulating iron while it’s hot and is actively lobbying for the EU to place an ultra-low cadmium limit on phosphate.

To do so, Russia bases its lobbying on an outdated 2002 report by Professor Smolders for the European Food Safety Authority. It conveniently ignores more recent studies by the same professor, which significantly updated the previous findings and concluded that cadmium levels in EU soils are in fact falling, not rising. Smolders’ updated findings were unanimously endorsed by the European Commission’s Scientific Committee on Health and Environmental Risks in 2015. This conclusive scientific evidence indicated that a cadmium limit on fertilisers of 80mg/kg would ensure that levels in the soil continued to fall and correspondingly that the already-negligible health risks would also fall. A limit at this level would enable the great majority of current supplies to the EU to continue unchanged.

The limit Moscow wishes to have the EU enforce would progressively tend towards 20 mg per kg of phosphate. This would automatically rule out of the EU market most of the main suppliers, shrinking the available global supplies to 5% of what they are today, most of it being in Russia, of course. Because EU policy makers may lack technical insight on the matter, it is possible that they will indeed acquiesce to the Russian pressure, depriving the EU fertilizers manufacturing industry of most of their supply and hitting EU farmers with a substantial increase in the price of an input vital to maintain crop yields and soil health.

Giulia Paravicini wrote for Politico : ”Phosagro (a Russian phosphate supplier) meanwhile has pressed its case directly, describing its product as “green fertilizer” in meetings with European officials. It has also hired EPPA, a Brussels-based consultancy, to convince EU countries with existing cadmium restrictions in national legislation to press for similar limits at the European level.” The magnitude of the lobbying onslaught indicates clearly how large the stakes are for the Russians.

When such restrictions are considered, suppliers usually look to new technological processes which would enable them to maintain themselves on the market. However, cadmium removal from phosphate, while having been the object of much expensive R&D, has so far proven to be a dead-end.

Either the cadmium-removal process comes at an unacceptable environmental cost, both through energy consumption and gaseous emissions, or the added production cost will choke the farmers, who will end up paying for the reform. This new regulation would therefore grant Russia a quasi-monopoly. Moscow will be able to change its prices at will, or even to cut off supplies to exert financial or political pressure on the EU.

The odds of this regulation coming through may seem unlikely, but Russia’s lobbying is hard, and they are engaged in a cadmium scare-campaign to get the European unknowing public to pressure EU legislators to vote for it.

There are, however, a few things which might save the European farmers from being hit with this reform, which would prove fatal to many of them. Phosphate rock is on the list of the EU’s Critical Raw Material, as farmers depend on it to maintain their output levels. Placing all its supplies into the hands of just one supplier – a country on which the EU currently imposes extensive trade and financial sanctions - may ring some bells within the EU policy makers. Such a blow to exports from the Middle-East, North and West Africa would also severely undermine the European Neighborhood Policy, through which the EU expends considerable resources to promote development and stability amongst its southern neighbors Finally, diplomatic services may see in the sole-supplier situation a sovereignty risk for the EU. If none of these fail-safe mechanisms work, EU farmers are in for a bumpy ride.