Belgium is asking other EU countries to support easing sanctions against the potash industry in Belarus
This is reported by Bloomberg, citing a letter of Brussels diplomats. Restrictions against Belaruskali, one of the world’s largest fertilizer exporters, caused serious problems for European farmers. It’s they who unwittingly become victims of sanctions that will do no harm to the Lukashenko regime.
As is known, in June this year the EU imposed sanctions against Belarusian fertilizers containing less than 40% and more than 62% of potassium. Belaruskali main export products are precisely in this range (40-62%). They are not subject to any restrictions. As well as any contracts with the Belarusian supplier, signed before the imposition of sanctions.
The European Union dealt with Belaruskali not at all the blow that opponents of Lukashenko’s regime were counting on. Why?
Apparently, the fear of destabilization of the food market turned out to be stronger than the desire to punish “Europe’s last dictator”.
Belarus accounts for about 20% of the world export of potash fertilizers. Even “soft” sanctions against this sector will lead to serious agitation and widespread increases in fertilizer prices. Costs for farmers and large agricultural holdings will rise – food prices will start to rise.
And it may happen at the most inopportune time. For example, during the next wave of the coronavirus pandemic.
The global market of potash fertilizers is very sensitive.
To understand this, one need only recall the events of 2018, when there was an accident at one of Belaruskali’s mines.
“The news, coming from the Belarusian Emergencies Ministry late Friday night, was grim: a roof collapse occurred in a Soligorsk mine more than half a kilometre deep, leaving two workers under the rubble,” the same Bloomberg wrote. – On the other side of the globe, reactions to the media headlines were swift and dramatic. In New York and Toronto, the shares of the biggest potash companies shot up. The reason for that was the fear that the emergency situation may cause a reduction in the volume of production in the world. The case of 9 March clearly shows that after decades of overproduction this market suddenly became nervous again about possible supply disruptions”.
Today it is safe to say that the West chose the worst possible time to hit Belaruskali.
The global fertilizer market is “stormy” as it is.
Producers of nitrogen-containing substances are closing down massively and cutting down the production due to the record high gas prices, which in the current situation brings nothing but losses.
Hurricane Ida hit the USA in August and September. This led to the temporary closure of the CF Industries complex in Louisiana, which combines ammonia and urea production plants. The already high prices of nitrogen fertilisers jumped even higher.
Meanwhile, Chinese authorities have banned phosphate exports from the country until early 2022. Their aim is to provide nutrient mixes to domestic consumers.
“Fertilizer prices have risen strongly recently, and it is more than likely that Chinese producers will contribute to the continuation of this trend. Farmers better start thinking now about buying fertilizer for the 2022 crop, as commodity prices will only increase,” warns Michigan Farm Bureau field crop specialist Teresa Sisung.
Fertiliser prices have been rising steadily throughout 2021, but in the last month they have made an incredible jump. This is clearly demonstrated by a recent publication by DTN, which analyses weather, agriculture, energy and commodity market information in real time. Urea is the fastest-growing commodity, having gained 26% in a week.
“For reference, DTN considers any price change of 5% or more to be significant. At an average price of $719 per tonne, urea is $147 per tonne more expensive than in mid-September. The last time it cost more than $700 per tonne was from April to June 2012”, – DTN writes
When it comes to potash, its average retail price is $710 per tonne – 19% (or $112) more expensive than last month.
Or two to three times more expensive than at the beginning of the year. The market has not seen such high prices for potassium fertilizers for more than 12 years.
This chain of news is organically complemented by the Bloomberg article stating the desire of Belgium to soften sanctions against the Belarusian potash industry. At that the edition notes that more than one country of the EU supports the idea of the Brussels diplomats.
It is understandable: European farmers are in dire straits. There is a shortage of fertilisers, and prices are “biting”. A substantial rise in food prices is the most innocuous thing that may threaten Europe in the next few months. And against the background of the objective difficulties faced by the agrarians, the European Union throws another dilemma to them in the form of sanctions against Belaruskali.’
For Lukashenko nothing terrible has happened.
Chinese, Indian, Brazilian farmers would be happy to buy the “falling out” of Belarusian fertilizers. But where will Europe find alternative suppliers?
Belgian diplomats say that breaking off cooperation with Belaruskali would mean huge costs for its customers. In addition, where is the guarantee that they will get products of comparable quality at inflated prices?
It was not by chance that Minister of Foreign Affairs of Belarus Vladimir Makei frightened the world with the consequences of the reckless sanctions policy. The fruits of this policy seem to be already reaped by some European companies.
They understand very well that the restrictive measures against the Belarusian potash industry will not harm Lukashenko’s regime at all.
Firstly, it is the European agrarians who are forced to refuse a reliable supplier of fertilizers. Secondly, the average EU citizen will suffer. They will pay for this knowingly losing attempt to drown fish in water.
Alexei Ilyashevich, Rubaltic.ru