European fertiliser producers are facing an “unprecedented crisis” and are left unable to “compete on the domestic and global market” due to gas prices “soaring over 1,000% from levels a year ago”, according to industry representative Fertilizers Europe.

The group called for “swift and decisive action” from European Union (EU) and national policy makers to support fertiliser producers in light of the “rocketing gas prices”.

These calls come days after it was announced that multiple manufacturers ceased production, with Fertilizers Europe warning that “over 70% of European production capacity has been curtailed”.

However, the group’s calls for intervention come just weeks after it was revealed that fertiliser manufacturers such as Yara delivered improved returns for the first half of 2022, citing “strong performance” from overseas assets.

Yara’s results show that second-quarter operating income was US$1,223m compared with US$477m a year earlier.

Unable to compete

Despite improved profits by fertiliser companies such as Yara this year, Fertilizers Europe says “with the cost of natural gas eight to 10 times higher in Europe compared to the US and even more compared to other fertiliser industry hubs, the European producers are not able to compete on the domestic and global market”.

The group warned that an urgent and decisive EU-driven crisis management action is needed to restore fertiliser production and stated that this is key to secure the EU’s strategic autonomy for fertiliser and to ensure Europe’s long-term food security.

“[The] European fertiliser industry is in full-fledged crisis because the European gas market is bust. The record high prices of natural gas, which represent 90% of industry’s variable production costs, makes it impossible for European producers to compete.

“If the situation prevails, we fear that remaining producers could also be affected”, said Fertilizers Europe director general Jacob Hansen.

Restoring confidence

Hansen said that Europe’s “gas market needs to be looked at to address today’s challenges, support domestic industry and restore market confidence”.

“The policy makers should also seriously consider crisis management policies for fertiliser industry to minimise long-term repercussions for EU food security.

“Moving away from dependency on Russian energy and raw material supplies cannot be achieved by closing plants and moving jobs outside of Europe. An urgent correction of current gas policies is therefore needed to address this very serious crisis.

“Europe needs a strong domestic fertiliser industry to continue producing food and in the long run to develop Europe’s hydrogen economy using green ammonia supplied by [the] fertiliser industry,” he added.

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