EU agriculture: Time to make balanced decisions

Why the influence of large corporations on the adoption of historically significant political measures plays into the Kremlin’s hands and may lead to a new crisis in EU agriculture, writes Olivier Pinon.

The events of recent weeks clearly show that the fears of many European entrepreneurs and politicians regarding the prospects of a trade war between the EU and the U.S. are beginning to materialize. Recently, European Commission President Ursula von der Leyen reacted sharply to the U.S. imposing 25% tariffs on steel and aluminum imports from Europe. The high-ranking official promised to take tough retaliatory measures.

An open trade confrontation with the US, the world’s largest economy, will be a heavy burden on European businesses, which are already facing difficulties in trade with China, as well as an almost complete cessation of business relations with Russia, which until 2022 was the EU’s third-largest trading partner.

Now it is crucial to make the most balanced decisions. The cost of a mistake is very high, especially when it concerns such a vital sector as EU agriculture, which today employs more than 7 million people.

Key measures affecting this sector are sometimes adopted without considering the opinions of farmers. Nevertheless, European media often give a platform for expressing viewpoints to the primary beneficiaries of potential changes, even if these are companies from non-EU countries. The arguments presented by representatives of such companies are full of internal contradictions, yet no one publicly opposes them. Perhaps this is precisely why agricultural professionals are excluded from such discussions?

One recent example is an interview given by Tiffany Stefani, head of the GR department of the Norwegian company Yara, to the specialized publication Agromatin. In it, the company representative attempts to justify the extreme necessity of imposing tariffs on Russian and Belarusian fertilizers, which are set to rise from 6.5% to 100%. Since we are unlikely to have the opportunity to discuss this at European regulatory meetings, let’s try to outline what exactly seemed particularly strange to us in this interview.

Fertilizer imports from Russia are not growing, and the EU’s dependency on imports is not increasing

The main argument of Yara’s vice president is that Europe’s dependence on Russian fertilizers is increasing. Tiffany Stefani cites data showing that the share of urea (the most common nitrogen fertilizer) imported from Russia rose from 21% in 2022–2023 to 30% in 2023–2024.

These numbers may seem convincing—but only at first glance.

Anyone with minimal knowledge of agriculture understands that discussing urea in isolation, without considering other types of nitrogen fertilizers (which are interchangeable), is at the very least misleading. Although urea imports from Russia have indeed increased slightly, this happened at the expense of a reduction in imports of other types of nitrogen fertilizers. Moreover, Russia’s share in the European fertilizer market has not increased, nor has the dependence Stefani speaks of: currently, Russia’s share of nitrogen fertilizer imports to the EU is lower than in 2019 and corresponds to the level of 2021—26%.

Why Yara remains silent about cheap gas for its plants in the EU

Tiffany Stefani rightly points out that European farmers buy Russian fertilizers because they are cheaper than those from other suppliers. European producers cannot compete with them due to the high cost of natural gas. Indeed, in the EU, the price of this raw material is among the highest in the world, significantly exceeding prices in the US and Russia.

However, Tiffany Stefani fails to mention that Yara’s plants also use gas at a price significantly lower than the European average. This cheap raw material for the company’s plants, which is partially state-owned, is supplied by another Norwegian state-owned energy company—Equinor. This factor is one of the key elements of Yara’s competitiveness in the EU.

Why Yara criticizes the choice of European farmers

Tiffany Stefani also claims that Russian fertilizers are of low quality. In doing so, the representative of the Norwegian company effectively criticized not only European farmers but also the entire EU fertilizer certification system.

Firstly, farmers are primarily interested in obtaining a healthy harvest and would not harm themselves. Secondly, fertilizers that do not meet established standards are simply banned from being imported into the European Union.

Production and import substitution will be much more expensive

The Yara representative carefully avoids the main question that concerns all European farmers: how much will fertilizer prices rise if tariffs are imposed? Instead, Tiffany Stefani claims that European producers will be able to increase production and capacity. However, it remains unclear why they would do so if, as she herself points out in the same interview, 20% to 30% of nitrogen fertilizer production capacity in Europe is currently idle.

The key argument about high production costs due to expensive gas, which plays a crucial role in fertilizer costs, is completely overlooked in this reasoning. It is obvious that the plan to offset the high cost of raw materials is to raise product prices. In other words, farmers will be the ones paying for it.

It is also claimed that fertilizer imports to the EU will continue, with Russian fertilizers being replaced by nitrogen fertilizer supplies from Egypt and Algeria. According to Fertilizers Europe, this will lead to a price increase of 4% per ton. However, cheaper Russian fertilizers will simply move to other markets.

Simply put, cheap Russian fertilizers will be replaced with more expensive imported supplies from other countries, while Yara’s products, made from cheap Norwegian gas, will become more competitive. There is no talk of increasing production or reducing the EU’s dependence on imports.

The focus should be on Russian gas, oil and nuclear fuel

While promoting the idea of imposing tariffs, Yara’s representative used the standard argument of recent years: striking a blow to the Kremlin’s military budget. The political aspect is understandable and logical. But can the €600 million per year that, according to Tiffany Stefani, Russian fertilizer exports bring to Russia’s budget be considered a significant sum compared to the EU’s multi-billion-dollar purchases of other Russian raw materials?

For example, in 2024, Russia ranked second in supplying liquefied natural gas to Europe, second only to the U.S. Eastern European EU countries continue to buy Russian oil, while France purchases nuclear fuel from Rosatom.

Russia’s revenues from fertilizer exports to the EU account for only 0.2% of all the Kremlin’s income. Perhaps European politicians, who consistently advocate for peace in Ukraine, should be more consistent and target more sensitive sectors?

To avoid mistakes, representatives of all interested parties must participate in such discussions. Otherwise, hasty decisions will continue to negatively impact the EU economy.

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