Since July 1st, the European Union has begun imposing tariffs on fertilizer imports from Russia, a move intended to cut off Russia's funding for the war in Ukraine. However, the initial impact of this policy has primarily affected European farmers.

Cédric Benoît, deputy secretary-general of the French wheat farmers' association (AGPB), stated bluntly that this policy "amounts to shooting oneself in the foot." He explained that European farmers are facing significantly rising fertilizer costs, while wheat prices have simultaneously plummeted to a five-year low, sharply compressing their profit margins.

According to World Bank data, global fertilizer prices have risen again this year, partly due to the additional import tariffs imposed by the EU. For instance, the average price of urea increased by 26.5% between May and July, reaching $496 per ton. The price of diammonium phosphate (DAP), another crucial fertilizer, also climbed from $550 per ton in 2023 to $736 per ton in July, a 10% year-on-year increase. More concerning is that EU tariffs on urea and nitrogen fertilizers will gradually increase over the next three years, from the current €40 per ton to a staggering €315 per ton by 2028, signaling potentially much deeper impacts in the future.

Russia is one of the world's largest fertilizer exporters, accounting for over 20% of global production and supplying about a quarter of the EU's fertilizer imports. Although Western countries initially refrained from including food and fertilizers in sanctions at the start of the Russia-Ukraine war, the EU has since gradually adopted tariff measures to reduce its reliance on Russia. EU officials have stated they will closely monitor price trends and may consider postponing tariff implementation if necessary. However, independent analysts point out that European suppliers have significantly raised prices when circumventing Russian products, forcing farmers to turn to more expensive alternative sources like Canada.

Against a backdrop of high agricultural production costs, coupled with energy expenses and environmental regulatory pressures, farmer dissatisfaction is growing. In 2024, farmers across Europe have already staged numerous large-scale protests due to high costs, free trade agreements, and government policies aimed at depressing food prices. Now, the introduction of fertilizer tariff measures is likely to trigger a new wave of discontent. Benoît revealed that many farmers are adopting a wait-and-see approach, delaying fertilizer purchases in hopes of price reductions. However, with major crop prices like wheat remaining low, bearing high fertilizer costs in the long term is proving almost unbearable for them.

In summary, while the EU's tariffs on Russian fertilizers carry strategic significance, their short-term effect has been to push up European agricultural production costs, exacerbate inflationary pressures, and potentially weaken domestic food competitiveness. The future trajectory of this policy will depend on market price developments and the reactions of the farming community. If fertilizer costs continue to climb, the EU may not rule out adjusting the pace of tariff implementation.