Update: Fertilizer and Food Security in Europe
Fighting food inflation is challenging when fertilizer companies cannot economically provide the plant food we need for our food crops.
Fertilizer manufacturers in Europe continue to struggle as evidenced by the closure of an Italian fertilizer plant by a major manufacturer, according to this Reuters article from August.
Aug 25 (Reuters) - Norway's Yara (YAR.OL), one of the world's largest fertiliser makers, is slashing ammonia production due to soaring gas prices, raising questions about Europe's ability to produce enough fertiliser for its crops.
Ammonia plays a key role in the manufacturing of fertiliser. Without it, crop yields will deteriorate because nutrients removed from soil during harvesting are not replenished.
Yara has repeatedly warned the world faces an extreme food supply shock due to a combination of high gas prices, the war in major grains producer Ukraine and sanctions on fertiliser producer Russia. read more
High energy prices brought on by the war in Ukraine and the push to end fossil fuels has hurt the European fertilizer industry, which relies on natural gas to produce the fertilizer we need to feed the world.
Yara began reducing ammonia production earlier in the year. It will only be using around 35% of its European ammonia capacity after its latest cuts, the company said on Thursday.
"We've basically never seen prices high enough to defend production at these cost levels," said Kepler Cheuvreux analyst Magnus Melvær Rasmussen. "It's not looking good and that's a problem for farmers, for food production and for food security."
Farmers will still be able to import fertilizer from outside Europe but it will be more expensive, analysts say. Alternatively, European fertilizer could be produced using ammonia exported from elsewhere.
Yara will use imported ammonia, where feasible, to meet customer demand, it said on Thursday.
Importing fertilizer from elsewhere will increase demand on the world market, which will encourage more production in areas with lower energy prices, but transporting ammonia from the point of production to inland fertilizer plants in Europe is a complicated enterprise and some would be alarmed at the carbon footprint
Yara is one of several European chemical companies that have curtailed ammonia output. Germany's SKW Piesteritz and BASF (BASFn.DE) cut some production earlier in the year. read more
The trend accelerated this week. read more
Grupa Azoty (ATTP.WA), Poland's biggest chemicals firm, will limit fertiliser production, it said Wednesday, citing an "extraordinary and unprecedented" rise in gas prices.
CF Fertilisers UK, a subsidiary of CF Industries Holdings Inc (CF.N), is temporarily halting ammonia production at its Billingham Complex due to high natural gas and carbon prices, it said on Wednesday.
For more information here is an article from Western Producer, Europe slashes fertilizer production:
“Buckle up for the ride,” said Josh Linville, analyst with StoneX.
“I hate to say it, but I think volatility is here to stay for the foreseeable future.”
The European Union’s nitrogen fertilizer output is being slashed by an estimated 400,000 to 500,000 tonnes per month (emphasis mine), according to an Argus Media analysis.
It started with shutdowns in Poland but has since spread across the region as companies such as Achema, Yara and Borealis shutter their plants.
. . .
“By a conservative estimate, Europe will soon be operating less than half of its installed capacity to produce these products — unprecedented even for the seasonally low demand period over summer,” stated the company in its recent Argus Insight: Fertilizers report.
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