The Atlantic Grains Council of Canada is calling for the removal of tariffs on Russian fertilizer imports to help ease a growing economic burden on farmers.
A number of factors have recently contributed to a reduction in fertilizer supply, driving prices higher, the organization notes, last month issuing a letter to the federal government making their case.
“There’s been a lot of things that have happened in the fertilizer industry since 2022,” explained Debra Conlon, director of government relations at Grain Farmers of Ontario.
Canada has remained the only G7 country to maintain tariffs on Russian imports, including 35 percent on fertilizer, following that country’s invasion of Ukraine. The move came at a cost to farmers, particularly those in Eastern Canada who relied more heavily on those imports.
Prior to 2022, Eastern Canada got 85-90 percent of the total nitrogen fertilizer used in the region from Russia. Now, eastern Canada does not get any fertilizer from Russia; instead, it imports fertilizer from the United States and Algeria.
“The real issue here is that the U.S. did not put tariffs on Russian fertilizer. So, since 2022, the United States has been importing fertilizer from Russia at a greater rate than they ever have in the past. And if you see it on a pie chart, it’s really remarkable to say they just basically didn’t import and then they imported a bunch of fertilizer from that region, and so that puts us at a competitive disadvantage to them[because] Russian fertilizer is cheaper and a better quality than what has been available to farmers [in Canada] since then,” said Conlon.
The Russia-Ukraine war had a big impact on the global fertilizer supply since Russia is a leading global exporter of nitrogen, potash and phosphorus. The conflict led to sanctions, disrupted logistics and cut off supplies of fertilizer, increasing the price as much as 50 per cent from February and April 2022.
Conlon referenced the underwater explosion that damaged Nord Stream 1 and 2 natural gas pipelines in the Baltic Sea as a major incident that affected the fertilizer supply chain. The explosion caused massive methane leaks, making the gas lines useless. Prior to this, these pipelines had been used to transport natural gas from Russia to Germany.
“Then there were a number of other things that happened around that time,” added Conlon.
She cited Europe’s current nitrogen production remaining at 75 percent of historical levels. The inability to return to full production capacity stems from structural and political limitations, such as the loss of cheap Russian gas supplies, environmental policies and carbon costs that encourage a shift away from traditional, carbon-intensive fertilizer production methods.
Another recent development in fertilizer supply chain issues is China’s halt on urea exports to prioritize domestic food security. In previous years, China’s urea accounted for around 10 percent of the global urea trade.
One of the major contributors to supply chain instability in the global fertilizer market has been the closure of the Strait of Hormuz due to the Iran war. About a third of the world’s fertilizer passes through the strait.
“This incident in the Middle East has a variety of things that have happened to impact fertilizer supply, beyond just the strait being closed,” explained Conlon.
“There were natural gas plants that were affected either by military action, or they pre-emptively shut down their natural gas plants, and so this really put a squeeze on fertilizer supply globally.”
All these global events have contributed to uncertainty in global fertilizer supply and price. In the Atlantic Grain Farmers’ letter to the government, the organization stated, “Grain farmers in our region received phone calls from fertilizer retailers warning that price quotes could no longer be provided due to extreme uncertainty in global supply and pricing.”
“When that global supply is hit, then the people [who] are selling it(fertilizer) to them (farmers) in Ontario are saying, ‘Hey, we can’t guarantee a price at that point,’ so the fertilizer companies got a message out that farmers should contact their retailer right away to make sure they store up supply. But there are still many farmers who don’t have the price. There are some farmers who have already pre-purchased and paid for their fertilizer supply, but those people who haven’t purchased and paid for it don’t know what the price is,” said Conlon.
“What we really hope is that the government takes this situation seriously and looks at all avenues for removing barriers, looks at building capability to produce fertilizers in the region we call the Grain Belt East, so we aren’t subject to this global geopolitics.”
