High gas prices and the Russian war of aggression against Ukraine have an unexpected side effect on the environment: fertilizer sales in Germany have fallen sharply. This comes from data from the Federal Statistical Office. So far this year, farmers have been reluctant to buy fertilizer, as reported by Baywa, Germany’s largest agricultural trader. One possible consequence is poorer harvests. But as a result, the nitrogen inputs in the groundwater are presumably lower.
The three most important types of fertilizer are nitrogen (N), phosphate (P) and potassium (K), which are available in different concentrations and mixtures in the agricultural trade. Nitrogen is the staple food for plants and quantitatively the most important fertilizer. According to the Federal Statistical Office, sales fell by 13 percent to 1.1 million tons in the 2021/22 marketing year. In the case of phosphate fertilizers, the Wiesbaden authority reported a 40 percent drop in sales to almost 115,000 tons. For potash it was 306,000 tons, a drop of 31 percent. Although fertilizer sales have been declining for years, such sharp slumps are unusual.
“Fertilizer prices had already more than doubled in autumn 2021 – before the start of the war in Ukraine – and reached an utopian high price level,” says a spokeswoman for the Bavarian Farmers’ Association in Munich. The main reason was the sharp increase in gas prices, which had already started before the Russian invasion. “Gas is mainly required as a raw material for the production of nitrogen fertilizers. “Against this background, fertilizer manufacturers had reduced production or shut down plants in the meantime.” The Russian invasion then meant another price shock for the fertilizer market. For the farmers, this initially seemed less painful than it used to be feared the start of the war.
“The producer prices for wheat have also risen since the end of 2021 and were so high that fertilization was worthwhile for the farmers in most cases, despite the high costs,” says Torsten Kurth, agricultural expert at the management consultancy BCG. “The most important fruit in Germany is wheat, the producer price in 2019/2020 was under 200 euros per tonne. After the start of the Ukraine war, that skyrocketed to over 400 euros per tonne at its peak.” But the price explosion did not last. In the spring of 2022 there were even fears that certain types of fertilizer could become scarce, but the opposite has happened.
“We have been seeing fertilizer prices falling since the fourth quarter of 2022,” says the Baywa spokeswoman in Munich. “This is due to several factors: lower energy costs and thus lower production costs for fertilizer production, subdued demand from farmers and the resulting oversupply of fertilizer on the market.” The farmers, who stocked up last year as a precautionary measure in anticipation of permanently high fertilizer prices, are now in an unpleasant situation. “Producer earnings for grain and oilseeds have fallen steadily since the beginning of the year,” according to the Bavarian Farmers’ Association. The wheat price in Bavaria is currently between 230 and 250 euros per ton. “Many farmers are now faced with the situation of producing grain with very expensive fertilizer at greatly reduced yields.”
Less fertilizer on the fields is not only convenient for the environmental authorities. Drinking water suppliers, food manufacturers and brewers should also be grateful. Increased nitrate levels in groundwater are not exclusively due to agriculture, but fertilization contributes to this. Compared to the 2010/11 marketing year, sales of nitrogen fertilizers in Germany have already fallen by almost 690,000 tonnes, without the harvest volume having shrunk accordingly. Environmentalists see this as proof that too much fertilizer has been used for decades. So far it is unclear when further reductions will actually lead to poorer harvests. “A loss in yield and quality will have to be expected,” says the spokeswoman for the Bavarian Farmers’ Association.
The EU wants to reduce the use of fertilizers by 20 percent, says Benjamin Subei, who specializes in agriculture and sustainability at the management consultancy BCG. According to the consultant, environmental requirements and cost pressure are both incentives for farmers to invest in technology instead of chemicals: “As a result of this and the higher prices, farmers are motivated to use technologies such as precision farming in order to reduce the amount of fertilizer and at the same time keep the yield stable .” The nitrogen content in the soil can be measured or detected both with “N-sensors” in the field and with the help of earth observation satellites, so that the farmers can avoid over-fertilization. However, such high-tech processes initially mean expensive investments for farmers. At the same time, Europe is becoming more dependent on fertilizer imports – the EU actually wants to achieve the opposite.
However, the chemical industry is suffering particularly from the very high gas prices in international comparison. For example, several European manufacturers have reduced production of ammonia, a raw material for fertilisers. Accordingly, the imports of nitrogen fertilizers to Germany have increased rapidly, as reported by the Agricultural Industry Association with reference to EU statistics. According to this, a total of 350,000 tons of three types of nitrogen fertilizer were imported from July 2022 to January 2023 – almost nine times as much as three years earlier.