Fertiliser report says import duties are costing farmers €1 billion

An investigation by the EU Commission may be imminent after a report found that existing trade barriers are costing European farmers nearly €1 billion in import duties.

The IFA-commissioned report by the Washington-based International Food Policy Research Institute examined competition in Europe’s fertiliser industry and alleges that fertiliser cartels and price fixing may be operable within the EU.

It was presented to the EU Commissioner for Agriculture today (Monday) by the IFA.

“The fertiliser market in the European Union is relatively concentrated and consequently, fertiliser prices are relatively high. This may be, at least partly, the result of a protectionist trade policy which benefits the European fertiliser sector to the detriment of the agricultural sector, which use fertilisers as an input.”

The report concluded that the long-term impact of the removal of all European import duties on fertilisers could result in €481m in welfare gains and more than 17,245 jobs created in the European Union.

It also says that the complete removal of all duties on fertiliser appears to be a beneficial reform for the European economy.

The report found that prices of fertilisers in Western European countries increased by 123% between 1970 and 2002, while prices in other countries like Brazil decreased by 65%.

It said the removal of import duties at the European border could result in an average decrease of 5.3% in domestic fertiliser prices in Europe.

According to the report, the removal of import duties could result in losses for the fertilizer industry of €123m, as well as a loss of €315m of European public revenue, but gains for the agricultural sector of €920m.

“This scenario leads to the creation of 17,245 jobs (conservative estimation). Most of the new jobs are created in the cereal, plant fibre (cotton) and agri-food sectors.”

Fertiliser Report – IFA Reaction

IFA National Chairman Jer Bergin said IFA expects an urgent investigation by the EU Commission on foot of the strong evidence put forward by the report.

“Fertiliser is the second biggest expenditure for Irish farmers with an annual spend of over €500m and the Commission must take action as family farm incomes are on the floor,” said Bergin.

He added that it is clear from the data collected that Europe’s market is not functioning as the duties and tariffs protect European manufacturers at the expense of farm families.

Bergin has met the EU Commissioner for Agriculture Phil Hogan to present the report to him.

IFA Inputs Project Team Leader James McCarthy said the ongoing concentration of Europe’s fertiliser manufacturing industry, coupled with greater vertical integration of the sector’s supply chain, has seen farmgate fertiliser prices increase at an unjustified rate relative to other input costs.

“The industry historically blamed the disparity on rising energy costs. However, the steep fall in energy prices over the last two years has not been reflected in retail fertiliser prices to the primary producer,” McCarthy said.