Enlarge image
Wagons in a Russian fertilizer factory: World's largest exporter
Photo:
IMAGO/Erik Romanenko / IMAGO/ITAR-TASS
Western governments have responded to Moscow's war of aggression against Ukraine with several packages of sanctions against Russia.
The goal: to hit the Russian economy in such a way that the war becomes too great an economic and political burden for Vladimir Putin.
But for some sectors of the economy, the numbers look sobering at first.
According to the Financial Times, statistics show that Russia was able to increase its income from fertilizer exports by 70 percent in the first ten months of 2021 compared to 2021, to $16.7 billion.
The sheet refers to an analysis by the UN Food and Agriculture Organization FAO.
According to this, the volume of fertilizer exports from Russia fell by only ten percent compared to the same period last year – although, according to the FT report, analysts had predicted a significant drop in deliveries when war broke out in February.
As the world's largest fertilizer exporter, Russia has benefited enormously from the price jumps caused by the Ukraine war and the associated energy crisis.
Natural gas plays a major role in fertilizer production.
In view of the high gas prices, manufacturers in Germany and other countries had reduced their production.
Farmers in Germany are struggling with enormous price increases for fertilizer.
The situation in emerging and developing countries is even more dramatic, where high prices endanger the supply.
In November, for example, the United Nations called for trade in Russian fertilizers to be made easier in the face of a hunger crisis in poor countries.
In December, the EU heads of state and government passed the ninth package of sanctions against Russia.
However, it provides for an exception in the agricultural sector: frozen assets of certain persons who play a significant role in international trade in agricultural products and food will be released again.
This relaxation is intended to increase food security in third countries.
Although the EU had not sanctioned the export of the fertilizer itself, certain financial sanctions had influenced it.
For example, EU member states had complained that deliveries were sometimes delayed out of concern about the possible involvement of sanctioned Russian companies or individuals.
India as a beneficiary
In recent months, Russia has increased its exports to countries such as India, Turkey and Vietnam.
Countries like India are the biggest beneficiaries of fertilizer imports, said Josef Schmidhuber of the FAO.
According to »FT«, it is unlikely that Russia will continue to benefit from higher prices this year.
The recent drop in gas prices in Europe due to warmer weather has resulted in lower fertilizer prices and European producers have ramped up production.
Thus, the demand for Russian fertilizer is likely to fall.
"This means that imports from EU countries will fall significantly, which is good news for farmers around the world," said Schmidhuber.
"European production is profitable and manufacturers continue to produce fertilizer," Chris Lawson, head of fertilizers at consultancy CRU, told the FT.
"The world nitrogen supply is sufficient and we expect a further decline in phosphate and potash prices," he added, referring to the three most important plant nutrients.
In addition to the high fertilizer prices, the global agricultural market was also hit hard by the loss of grain deliveries from the Black Sea region.
The price of wheat reached record levels.
Poor countries that source grain from Russia and Ukraine felt the effects of this.
In July, Russia, through the mediation of the United Nations and Turkey, agreed to grain exports through the Black Sea.
Moscow had repeatedly mentioned the easing of sanctions against its fertilizer exports as a condition for the grain agreement.
According to FT, grain deliveries have returned to pre-war levels.
According to this, the tracking of ship movements shows that in the last three months of 2022 about 21 percent more grain (including wheat and corn) was shipped than in the same period last year.
mmq