Spain: Fertilizer prices are threatening upcoming harvests
“We talk a lot about automotive microchip shortage forgetting that fertilizers and seeds are the chips of agriculture and we need production autonomy, which we don't have at the moment". This is how the Agriculture minister summed up the current problem with fertilizers across Europe. Spanish farmers are living with uncertainty as they don’t know if they will have enough fertilizers for the next season.
The underlying problem is a slowdown in the manufacture of fertilizers, due to the high cost of gas on international markets, which has forced some plants involved in the production of this chemical input to close -temporarily for the time being. Of the several fertilizer factories in Spain (Fig. 1), only two seem to be producing at a low rate at the moment although there is no official confirmation from the companies.
Uncertainty in the primary sector
Fertilizer production in Europe has been reduced by 70% because of high gas prices - gas is both a raw material and a source of energy to manufacture them. Another important factor regarding Spain is that the country needs to import half of the fertilizers used by farmers.
In the primary sector, concerns about what will happen in the coming months are clear: "Last year there were already supply problems and, in some cases, it was not possible to make the crop fertilization at time", a spokesman for the farmers’ organization COAG says. For the farmers' organization UPA, "we are living in times of uncertainty because we don't know what is going to happen", its spokesperson adds in reference to both the cost of this input and its possible lack of stock on the market.
The sector speaks out
For the sectoral association ANFFE "the situation is particularly serious in the case of nitrogen fertilizers, as gas is their main raw material. In addition, the fertilizer industry is a high consumer of electricity and the sharp increase in its prices is well known". According to its director, Paloma Pérez, "if measures are not taken in time, there could be very negative consequences both for the sector companies and for the entire value chain".
Ms Pérez expressed her fear that "being such essential products for the agri-food sector, we will end up increasing our dependence on third countries". For the moment, manufacturers hope that there will be no shortage of produce, at least in the coming months. "Our dependence on Russian fertilizers is less than that of other member states, such as Germany or Poland, as we receive imports from more than 17 countries”.
However, fertilizer prices will remain high because they depend on the international market situation and on production costs which have soared as a result of raw material increases and gas and electricity prices as well.
Green hydrogen is the future
HyDeal España, an initiative promoted by several big companies - including Grupo Fertiberia - will become the largest renewable hydrogen mega project on a global scale, according to the classification of the International Renewable Energy Agency. The green hydrogen will be supplied for the production of green steel, green ammonia, green fertilizers and other low-carbon industrial products.
A first stage will be completed by the end of 2023 and Fertiberia will have its cluster in Palos (Huelva) ready by 2026. Fertiberia currently consumes 30% of the hydrogen converted into fuel produced in Spain.
The authorities' reaction
At a press conference, the Agriculture minister assured that "there is a concern factor on the issue of fertilizers". "It is something that worries me in the medium and long term," the minister added. "The Commission said that the reduction of fertilizer use among member states is 15%-20% on average because of their price". Besides that, in his first meeting with the new France Agriculture minister, Mr Planas expressed the commitment of both countries to continue working towards EU autonomy in fertilizer production.
The Spanish director of Agricultural Productions and Markets, from the same ministry, recently indicated that the Spanish government is committed to alternatives for the manufacture of fertilizers within the scope of the circular economy. In particular, she mentioned the use of animal by-products and other biological waste.
She recalled that the National Recovery Plan, financed by Next Generation EU funds, included such alternatives through the support program for the implementation of precision agriculture and 4.0 technologies. This line of aid has a budget of 79 million euros for the period 2021-2023.
Drastic fertilizer reduction due to drought
In Spain there is a further disturbing element. The last problems caused by the severe drought which have affected the harvest and sowing decisions and fertilization by farmers also have had an impact on the use of fertilizers, which has been significantly reduced so far this year.
According to data from the main manufacturers, in 2021 the volume of chemical fertilizers used by farmers fell by 4% in Spain, but in 2022 a much more significant decrease is expected. According to a COAG farmer, "inorganic fertilizers have risen from 50-60 euro cents last year to 1.60 euros in 2022". "We can't afford it and that's why we have to reinvent ourselves technologically".
For some, the alternative lies in agroecology, using only organic fertilizers, the price of which has hardly increased in recent months. Although organic farming in Spain continues to add hectares, it is still a minority practice in the country -barely 10% of the cultivated area- although the rise in the price of chemical fertilizers could give it an unexpected boost.
Scientific advances are making organic fertilizers more efficient day by day. One example is the project of Dr. Emilio Nicolás, a researcher at CEBAS-CSIC in Murcia: "when you switch from conventional to organic farming, yields can drop by 8 to 12%".
Some figures on the fertilizer sector in Spain
According to the sectoral association ANFFER, the following are the main figures of the Spanish industry of fertilizers:
