en.Wedoany.com Reported - To counter inflationary pressures stemming from the volatile Middle East situation, the Council of the European Union has decided to suspend tariffs for one year on key nitrogen-based fertilizers and production inputs, such as urea and ammonia. The move is also aimed at accelerating the EU's reduction of dependence on supply chains from Russia and Belarus.
The European Commission estimates that this temporary measure could save EU agricultural producers and the fertilizer industry approximately €60 million (about $69.6 million) in import duty costs. The policy objective is to reduce operational expenses in the agricultural sector, expand international trade networks, and progressively move away from reliance on Russia and Belarus.
Under the decision's framework, the tariff suspension applies only to products that do not already enter the EU duty-free through Most-Favored-Nation (MFN) treatment or other preferential trade agreements. To protect the interests of domestic fertilizer producers, the regulation sets import quotas: the quota is based on the total MFN import volume in 2024, plus an additional 20% of the volume imported from Russia and Belarus that year.
The European Council stated clearly in a press release: "The EU has decided that, due to Russia's unprovoked and unjustified war of aggression against Ukraine, the suspension measure does not apply to products imported from Russia. In view of Belarus's support for Russia and its disregard for international law, fundamental freedoms, and human rights, the measure also does not apply to products imported from Belarus."
The macro-economic backdrop for this legislative intervention is the continuous rise in fertilizer asset pricing since 2021, which has driven up agricultural production costs and fed through to end-consumer food prices. Statistics show that in 2024, the EU imported 2 million tonnes of ammonia and 5.9 million tonnes of urea for domestic nitrogen fertilizer production, along with 6.7 million tonnes of finished nitrogen-based fertilizers and mixtures. A significant portion of these already entered the EU duty-free through existing trade partnerships, but the remainder, supplied by countries subject to the Common Customs Tariff, faced standard tariff rates of 5.5% to 6.5%.
Makis Keravnos, Minister of Finance of the Republic of Cyprus, stated: "Today's decision allows European farmers easier access to affordable and reliable fertilizer supplies, which is good news for the agricultural sector and EU consumers alike. At the same time, we are accelerating the move away from Russian and Belarusian products, building more resilient supply chains and partnerships globally."
Since the beginning of this year, global commodity prices have risen by an average of 16%. Military conflicts involving the United States, Israel, and Iran show little sign of abating in the short term, pushing the Brent crude oil benchmark price above $112 per barrel and driving fertilizer costs to their highest level since 2022. The World Bank warns that energy prices alone could rise by 24% by 2026 due to disruptions in the Strait of Hormuz and surrounding shipping lanes, and hydrocarbon-derived fertilizer prices are projected to surge by 31% this year, reducing farm incomes and threatening future crop yields.
According to the latest World Bank data, the global fertilizer price index rose by more than 12% overall in the first quarter of 2026, reaching its highest level since October 2022. Transport disruptions along the Middle East trade corridor—which handles nearly a quarter of global seaborne urea exports—have pushed international urea prices above $850 per tonne, an 80% surge since February 2026. The benchmark price for diammonium phosphate (DAP) rose by over 10%, mainly due to international sulfur prices doubling since January 2026 and tighter export restrictions in China.
Supply-side constraints have been further exacerbated by physical infrastructure failures at major manufacturing centers. Regional production data indicates that Iran completely halted domestic ammonia production during the conflict; manufacturing facilities in Qatar suspended the production of urea, ammonia, and sulfur after extensive operational damage to critical industrial assets. The tightening of international supply networks has, in turn, reduced domestic input availability and downstream output in major consumer markets like India, weakening fertilizer affordability indicators for global agricultural production to their lowest levels since mid-2022.
The ongoing maritime blockade has sparked widespread economic concerns. The World Food Programme estimates that rising fertilizer and food costs in 2026 could push up to 45 million people into severe food insecurity. Indermit Gill, Chief Economist of the World Bank Group, noted that the war is impacting the global economy in cumulative waves, shifting from rising energy prices to higher food costs and increased inflation. While diplomatic efforts between the United States and Iran regarding shipping restrictions and nuclear negotiations remain deadlocked, transport disruptions continue to disrupt global supply chains, including potential jet fuel shortages in Europe.
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