Analysis by the International Food Policy Research Institute (IFPRI) indicates that carve-outs in trade sanctions have been effective in sustaining some agricultural exports and fertilisers from Russia and Belarus.

However, exports of anhydrous ammonia from Russia and potash from Belarus, which have traditionally used EU transportation facilities, have fallen sharply, according to senior research fellows at IFPRI Joe Glauber and David Laborde.

The current sanctions regime put in place by the EU, USA, Canada and others sought to put exceptions or carve-outs in place for agricultural outputs and inputs. Potash from Belarus is the exception, given that it is central to the Belorussian economy.

The EU imposed specific sanctions on potash companies, banning imports into the EU and the use of EU territory to facilitate trade. To ensure Belarus does not circumvent this, specific measure are in place to prevent imports of potash from Russia.

Russia has repeatedly called for the reopening of the ammonia pipeline through Ukraine, which exports the key nitrogen ingredient through from the Black Sea to the global fertiliser supply chain.

Why sanctions matter

Russia is a key fertiliser producer and exporter. In the nitrogen market, Russia accounted for roughly 15% of global production, but 25% of global exports.

Similarly, in phosphate, it accounted for 12% of global production and 16% of global exports. Russia and Belarus together accounted for 40% of global potash exports.

Russia and Belarus together accounted for 40% of global potash exports.

While sanctions have not directly targeted food and fertiliser trade, the trade has been indirectly disrupted. Sanctions are imposed on individuals, which has affected their business interests in fertiliser and grain.

Financial sanctions have made trade cumbersome and increased the cost of trade. Insurance has been problematic and some companies, particularly PLCs, have publicly distanced themselves from all business activity with Russia.

Impact of sanctions

Glauber and Laborde sought to analyse the extent to which sanctions have affected food and fertiliser exports.

They used trade data from importing countries, as Russia and Belarus are no longer reporting trade data. While not perfect, this approach gives a reliable approximation.

They found that most exports are down compared with 2021, except for phosphate products which are up due to restricted exports from China during 2022.

The greatest impact was found to be on ammonia, which is used to manufacture nitrogen, as well as for industrial uses. Exports were down 63%.

Urea exports were down 23% in the January to August period on 2021, while potash was down 19%. Wheat exports were down 11%, which reflects the drop in exports that occurred in the early weeks of the war, according to Glauber and Laborde.

The data showed that the greatest impact was seen in the first four months at the start of the war. This was attributed to disruptions to Black Sea shipping and Russia’s own exports restrictions.

Impact on importing countries

The analysis by Glauber and Laborde found that those countries reliant on fertiliser imports from Russia offset reduced Russian supply with imports from other countries.

Brazil is the second-largest potash importer in the world after the US. In the first nine months of 2021, about 20% of Brazil’s potash imports were from Belarus.

For the same period in 2022, imports from Belarus fell by 46%, with much of the decline offset by imports from Canada. Overall, Brazil’s imports were up slightly on 2021.

A similar picture was seen with anhydrous ammonia imports to Egypt for the manufacture of nitrogen fertilisers.