Declining natural gas prices are expected to stabilise EU fertiliser markets and ease the pressure on EU farmers this year, the European Commission’s short-term outlook has said.

“After lower fertiliser application rates in 2022, EU farmers are once again expected to use fewer mineral fertilisers than usual, due to lower volumes of fertilisers purchased at a higher price and uncertain crop price prospects,” it said.

Lower application rates, combined with unfavourable weather conditions, have contributed to a decline cereal production in 2022/2023 of 9.2%, it added, whereas EU oilseed production is estimated to increase significantly (+4.1%).

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"Farmers are increasingly opting for crops with lower fertiliser needs and mineral fertiliser use is expected to be below long-term average in the upcoming season too.

“The input price pressure on farmers is expected to ease in 2023 (eg lower forecast cereal prices would stabilise feed demand), but input costs are forecast to remain well above long-term average.

“Depending on producer prices, high input prices may challenge the livestock sectors in 2023," it said.

For example, as raw milk prices have passed their peak and could decline, milk deliveries could decrease by 0.2%, it warned.

Competitiveness

Historically high input prices affected the international competitiveness of EU agri-food products negatively in 2022, the outlook added, in addition to the consequences of a weaker euro.

“For example, increasing refining costs for sugar due to high natural gas prices, together with a smaller EU sugar beet harvest as a result of unfavourable weather conditions, led to a large increase in the EU sugar price in autumn and winter of 2022/2023 (+51% since September 2022).

“This unproportional EU price increase as compared to world market prices could drive up EU sugar imports by 34% in the current campaign, while exports are forecast to decline by 31%, driven by worsened EU competitiveness.”