EU Lifts Fertilizer Duties Amid Hormuz Crisis to Support Farmers and Markets
EU Response to Fertilizer Price Surge and Market Disruptions
By Julia Payne
Temporary Suspension of Customs Duties
BRUSSELS, May 22 (Reuters) - The EU will temporarily lift customs duties on key nitrogen-based fertilizers such as urea and ammonia for one year to mitigate the knock-on effects of the Iran war, the Council of the EU said on Friday.
Impact of Strait of Hormuz Closure
Global fertiliser prices have jumped following the near total closure of the Strait of Hormuz, a narrow shipping route along Iran's coast through which around one-third of global fertiliser trade passes.
EU's Fertilizer Dependency and Price Effects
While the EU does not depend on the nitrogen-based fertilisers, namely urea, produced in the Middle East, prices for all types of fertilizers have risen as countries race to source alternatives.
The U.N. Food and Agriculture Organization warned last month that a prolonged blockade could trigger an agrifood catastrophe.
Scope and Limitations of the Suspension
The suspension will not apply to fertilizer products imported from Russia or Belarus, the Council statement said.
The EU imports a significant volume duty-free from countries with preferential access, but a "large volume" still arrives with tariff rates of between 5.5% to 6.5%, the statement said.
Quota and Implementation Details
"To balance the interests of EU producers, the measure is limited to a quota of goods equal to the volume of MFN (most favoured nation) imports in 2024 plus 20% of the volumes imported from Russia and Belarus in the same year," it said. The measures will come into force in a few days once they are published in the EU's Official Journal.
Global Agricultural Impact
Regions where the planting season is already underway are showing early signs of stress.
Effects on Major Exporters and Crop Supply
Farmers in Australia - the third largest wheat exporter - are planting less this year, risking a harvest that is up to 40% smaller. Across Asia, rice supply is expected to fall this year due to the Iran war and an emerging El Nino.
EU Fertilizer Import Statistics
The EU imported 2 million tonnes of ammonia and 5.9 million tonnes of urea in 2024, the statement said, and 6.7 million tonnes of nitrogen-based fertilisers and mixtures containing nitrogen.
Middle East Share and EU Dependency
The Middle East accounts for a small share of this volume. According to the European Commission, the EU's direct dependence on the Middle East is about 3% for ammonia and 1-2% for nitrogen fertilizers.
(Reporting by Julia Payne; Editing by Aidan Lewis)
