European fertilizer industry defends channeling CBAM funds to farmers

Industry group Fertilizers Europe has called for revenues from the EU's Carbon Border Adjustment Mechanism to be channeled directly to farmers and for a freeze of the EU Emissions Trading System free allocations until 2030, as the war in the Middle East ripples across markets, according to an April 14 press release.

Fertilizers Europe defended a "robust implementation of CBAM" ahead of the European Commission's Fertilizer Action Plan and called for the reduction of the bloc's reliance on fertilizer imports.

"Farmers need direct financial support, but not at the expense of EU production," Aviv Bar Tal, chief commercial officer at OCI Global and board member of Fertilizers Europe, said. "Directing CBAM revenues to farmers will ensure they receive essential support while preserving Europe's industrial base."

"The pace of ETS free allocation phase out, and its direct impact on CBAM, is critical for farmers' competitiveness," Juan Pablo Llobet, CEO of Fertiberia, said. "If the transition moves too quickly, costs will rise across the value chain -- costs that farmers cannot absorb or pass on."

The European Commission has no plans currently to exempt fertilizers from CBAM, an European Commission spokesperson confirmed to Platts April 13.

The proposals come as European and global fertilizer prices surge amid the ongoing virtual closure of the Strait of Hormuz.

Increased prices for natural gas, a key feedstock for nitrogen fertilizer production, in Europe amid the war contributed to reduced European output.

LAT Nitrogen announced March 26 it will stop production at its Grandpuits plant in France, and Agrofert said March 13 it is running its ammonia production at a reduced rate over the "dramatic soar in gas prices".

Platts, part of S&P Global Energy, assessed granular urea prices basis FCA France at Eur750/metric ton on April 14, up from Eur504/mt on Feb. 26, before the war in Iran broke out.