What is happening in the fertilizer market is rough: everyone in Hungary will feel it
agrarszektor.hu
Monday, March 28, 2022, 6:00 p.m.
In recent years, the lives of European farmers have not been enviable, they have had to overcome many obstacles, and the good seems to be still to come. Fertilizer is one of the cornerstones of all agriculture, so if there is a problem with it, it will drag other sectors with it – and unfortunately this seems to be the case. AKI’s data show that fertilizer prices increased by almost 60%, as a result of which net sales of fertilizer increased to more than HUF 50,225 billion in 2021. Despite the fact that the average price of fertilizer increased by 57.7% compared to the previous year, according to the calculations of the CSO, the sales volume did not decrease in 2021, and even increased by 54 thousand tons, or about 2.9%. demand. What will happen now? It would be almost impossible to say even with orbits.
Recently, our newspaper also reported that what the market had been afraid of for months had happened: Hungary’s most important player in the fertilizer market is stopping ammonia production due to dramatically increased gas prices. This has been devastating news in several ways, as crop prices have also risen sharply in recent months, and further increases are more likely to be reflected in food prices and thus in inflation data. If food is already 8-20: Russia may rise due to food feed prices, which will further increase the malnourished globally. A preliminary assessment by the Food and Agriculture Organization of the United Nations (FAO) is unclear whether Ukraine will be able to harvest the crop because of the protracted war, but the future of Russian food exports has also become uncertain.
The outstanding agricultural event of the spring: Agricultural Conference in Kecskemét
The Portfolio Group Agrarian 2022 conference will be held in Kecskemét on April 6, which will provide the spring of the Hungarian agricultural economy with a spring that will establish and strengthen the financial year. The event presents and explains in detail the most important changes in legislation, subsidies, markets, financing, innovation and profitability that can have a decisive impact on the activities of agricultural enterprises. The conference will provide practical guidance and up-to-date information to enable agribusiness results to make economic decisions. The event will provide all farm-sized farmers with useful information on the most significant changes in the agricultural economy in 2022. Don’t miss the Agrarian 2022 Conference on April 6 in Kecskemét!
Nitrogen Works also spoke
In its announcement, the company informs that as a Hungarian member of the European Fertilizer Manufacturers Association, it welcomes the European Commission’s proposal for a temporary crisis garden, which will provide possible support to farmers and fertilizer manufacturers. As they write, the aid has become necessary to address the current challenges, which could provide a solution both to the increased costs for farmers and to the extreme risks of fertilizer producers in the natural gas market.
– said Zoltán Bige, Strategic Director of Nitrogénművek Zrt. Europe’s fundamental interest is a strong agricultural production base, added by all industries and Nitrogén Zrt. In addition to the objectives of the EU Green Agreement.
What to expect in Hungarian agriculture on the fertilizer front?
They have more than tripled in price in the last year and a half, as the prices of various fertilizers and natural gas have risen sharply. Fertilizer manufacturers, who have been at a disadvantage due to rising raw material prices, have reduced or stopped production in the last six months, so that supply difficulties have developed in the market so far, which is why they are continuing to increase their prices. The situation could be exacerbated by the fact that the Norwegian Yara has made a similar decision: one of the world’s largest fertilizer producers is also cutting back on ammonia production due to increased costs. As our paper reports, the head of Yara International, a fertilizer maker, said the Russian-Ukrainian war could cause a huge shock to global food supply as well as food costs. He sees that as Russia produces huge amounts of nutrients that are the raw materials of a manure-produced work, if some plants do not receive the necessary elements provided by fertilizers, yields could fall by as much as 50. He stressed, for him, the question is not whether there will be a food crisis in the world, but how big it will be.
This must be felt by producers
Nitrogénművek Zrt. Is one of the leading producers of nitrogen-based fertilizers and a distributor of agricultural raw materials in the Central European region. In Hungary, Nitrogénművek represents fertilizer production, which is an important sector in the EU in terms of turnover and employment, but especially in the food industry. Nitrogénművek Zrt. Is present in the industry in more than 15 countries, with more than 700 international employees and a 90-year history. The rise in the price of one of the most important inputs in agricultural production could further heat the already significant and new impetus to the yellow crop price cycle through the war. More expensive cereals as well as sunflowers and canola will certainly have an impact on food prices as well.
Banned the export of fertilizers to Ukraine
The news came in mid-March that the Ukrainian Ministry of Agriculture had banned the export of nitrogen, phosphorus, potassium and complex fertilizers to support the domestic fertilizer market. As a result of the Russian invasion, Ukraine has imposed severe restrictions on the export of several other agricultural products, such as wheat, corn, or sunflower oil. In the coming weeks, farmers will reduce the area sown to sunflower, canola and corn, replacing it with more buckwheat, oats and millet.
The Ukrainian Minister of Agriculture also resigned
Roman Leschenko resigned on March 24, 2022 from the APK-Inform agricultural analysis and consulting firm, four weeks after Russia invaded Ukraine. The Russian-Ukrainian war had a serious impact on spring sowing and the export of Ukrainian agricultural products. In an interview with Reuters this week, Ukraine’s agriculture minister said Ukraine’s spring acreage could shrink by more than 50% this year from 2021 levels. This means that instead of the 15 million hectares expected before the Russian invasion, the Ukrainians can only plant about 7 million hectares this year. Ukraine is a major global farmer and exporter, but the war in the next 2022/23 season could significantly reduce 2022 crops and exports. Ukraine has already suspended exports of rye, oats, millet, buckwheat, salt, sugar, meat and livestock since the invasion, and introduced restrictions on exports of wheat, corn and sunflower oil. product, the country has completely stopped the export of fertilizers.
István Nagy warns Hungarian farmers to rest
The Minister of Agriculture announced that Hungary will receive HUF 6.4 billion from a total of EUR 500 million in crisis management packages. It is a success for agricultural diplomacy that, while we account for 2.1% of the Union’s agricultural production, almost 3.4% of the available resources have been obtained. The main element of the proposal is an emergency aid package totaling EUR 500 million, which can be used to support the most troubled economic sectors. On 23 March, the European Commission published details of a multi-component crisis management package aimed at increasing input costs and supporting agricultural sectors in difficulty as a result of the Russo-Ukrainian war: Hungary nearly € 17 million (about HUF 6.4 billion) ) will benefit from the crisis management package.
In addition to the already declining prices, the Russo-Ukrainian war became “connected”, and then another dramatic news came: natural gas prices more than doubled and the risk of security of energy supply arose, Nitrogénművek Zrt. Temporarily stopped the production of ammonia. However, István Nagy announced soon afterwards that the fertilizer needed for spring agricultural work is available in sufficient quantities in the country. The head of the ministry also discussed the supply situation with the Hungarian fertilizer distributors and importers, the National Chamber of Agriculture and the Association of Hungarian Economic Circles and Cooperatives. As stated, the partial shutdown of European fertilizer production capacities in Hungary is not a direct problem at present, despite the fact that farmers are laughed at by László Bige. With the statements of the billionaire again, it only causes panic and with this he wants to push the price of fertilizer again. For the time being, it seems that there is no need to fear a shortage in Hungary, but even more so. But what else can await us and the farmer, and how food prices will develop, is, as we have written, predictable and impossible – and perhaps unnecessary.
Cover image: Getty Images