EU Eases Restrictions on Fertilizer Exports Imposed on Russia

The European Union recently announced that it was easing the sanctions levied on Russian fertilizer exports. While the move would undoubtedly ease the pressure on fertilizer prices and reduce farming costs from producers around the world, it has been met with rebuke from Ukraine.

The decision was preceded by a fight between Western European nations that were looking to reduce the restrictions placed on Russian fertilizer exports and Eastern European nations that wanted to maintain the sanctions.

The six Western European nations argued that the intermediaries tasked with handling shipments of Russian fertilizer stuck in ports could be held liable for violations. On the other hand, four Western EU member states led by Poland said that clearing these stuck Russian exports would allow the Kremlin to continue its invasion of Ukraine, and Russia’s fertilizer industry is effectively owned by oligarchs allied with President Vladimir Putin.

Ukraine was of the same opinion as the Eastern bloc, with Foreign Minister Dmytro Kuleba stating that this move would deal a blow to the entire sanctions regime, undermine global support for Ukraine and harm joint efforts to halt the Kremlin’s invasion. He added that Ukraine strongly opposed the move to allow Russian fertilizer exports and thanked the EU members that had fought against easing restrictions against Russia.

Soon after Russia invaded Ukraine in February, several Western countries issued a variety of sanctions against the Kremlin. These sanctions mostly involved banning Russian exports as a way to cripple its economy and harm the Kremlin’s war effort. The Kremlin responded by cutting the export of critical resources such as fertilizer and natural gas to the rest of the EU.

However, while Russia has managed to find new buyers for its exports in countries such as China and India in recent months, countries in the EU and the Americas have felt the impact of reduced Russian exports acutely.

Russia is one of the largest exporters of fertilizer in the world, accounting for around 15% of worldwide nitrogenous fertilizer exports. The World Bank also estimates that global fertilizer prices went up by almost 30% in the early months of 2022. This increase in price over the course of 2022 put immense strain on agriculture producers in the EU, U.S. and South America, with experts stating that the situation could descend into a global food crisis if fertilizer prices continue trending upward.

The EU’s recent announcement will finally open up the fertilizer supply chain and allow fertilizer prices to go down. Russia and Western European leaders also say that easing restrictions on Russian fertilizer could save territories such as Africa, which are staring down the barrel of famine.

As normalcy is restored to Russian fertilizer exports, the pressure exerted on the production systems of other players such as Compass Minerals International Inc. (NYSE: CMP) will ease while the supply chain stabilizes.

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