The conflict between Israel and Iran is the latest potential driver for increased fertiliser prices for Irish farmers. Iran is the world’s third largest exporter of urea and attacks on its energy infrastructure means production there will face challenges.

The level of EU imports from Iran is minimal due to restrictions in place but the knock-on effects for global supply will be felt across markets.

More worryingly, Egypt, a major supplier to Ireland, shut down fertiliser production at the weekend after Israel took the decision to suspend production at two of its gas fields as a direct consequence of the increased hostilities with Iran.

The loss of a major source of gas imports has forced Egypt to prioritise usage of the fuel, which has led to the suspension of fertiliser production.

While the shutdown is temporary in nature it has the potential to add to merchant prices at a time when farmers may be seeking to increase stocks ahead of the introduction of the Carbon Border Adjustment Mechanism (CBAM) payment at the start of next year which could, according to the Irish Fertiliser Manufacturers and Blenders Association, add €25-€30/t to the cost of imports.

Russian taxes

To add more fuel to the price fire, the European Council approved the regulation which will increase duties on fertiliser imports from Russia and Belarus from 1 July this year.

While the initial level will be low, at €40-€45/t and have a quote of 2.7mt for the first year, it will rapidly increase to between €315-€430/t by July 2028 and the quote will be slashed to 0.9mt.

In 2024, the EU imported 4.4m tonnes of fertiliser from Russia.

The document on the new tariffs approved by the European Parliament said that the European Commission should take all appropriate actions to remedy any substantial increase in the price of fertiliser following the introduction of the legislation.

It adds that “such actions may include, where appropriate, a proposal for the temporary suspension of tariffs for those goods imported from and originating in countries other than the Russian Federation or the Republic of Belarus.”

European Commissioner for Agriculture Christophe Hansen said last week that the EU could lower tariffs on imports of US fertiliser as part of any trade deal.

Those imports, however, would be subject to the CBAM payment from 1 January next year.