Poland and Baltics call on EU to impose customs duty on Russian fertilizers

Poland is one of Ukraine's staunchest supporters in its war with Russia and has long called for stronger sanctions against Moscow.

"The joint letter from Poland, Lithuania, Latvia and Estonia was submitted to the European Commission on November 20, 2024," PAP quoted the Polish Ministry of Development and Technology as saying.

"Some member states that were not signatories of the letter declared their readiness to hold constructive dialogue and to consider supporting the Polish initiative at a later stage."

At the same time, the ministry pointed out that it was also a co-signatory of a letter dated November 8, 2024, initiated by Sweden, urging the European Commission to take action to increase customs duty on goods from Russia and Belarus to counteract financing the unprovoked attack on Ukraine.

According to data from the Central Statistical Office (GUS), after seven months of this year, the import of fertilizers from Russia to Poland amounted to more than 721,500 tons, compared to over 246,700 tons in the same period last year. The import of fertilizers from Belarus during this time exceeded 185,500 tons, compared to 13,400 tons last year.

Magdalena Piłat, a supervision department director at the Ministry of State Assets, informed in early November that the ministry was in talks with the Ministry of Finance regarding tightening the control of fertilizer sources coming to Poland.

She reminded that the Ministry of Development and Technology was finalizing preparations for submitting proposals to the European Commission regarding the introduction of customs duty on fertilizers from the East. According to Piłat, the discussions were no longer focused on a 30% duty, but 30-40%.

The representative of the Ministry of State Assets emphasized that diplomatic efforts were also underway to gain the European Commission's support for introducing customs duty. She pointed out that in the case of tariffs, it would be necessary to obtain the support of 55% of Member States, i.e., 15 out of 27 EU members. She noted that other instruments, such as reducing quotas or sanctions, require unanimity.

At the beginning of November, Hubert Kamola, Vice-President of Grupa Azoty, informed the Polish Parliament that the share of fertilizer imports from Russia and Belarus in total fertilizer imports had risen to 66% from 37% in 2022. "The companies we compete with are limited liability companies with a maximum capital of 5,000 zlotys. For example, some are registered in Warsaw at the same address," he pointed out.

According to Paulina Zielińska-Olak, national sales director for fertilizers at Anwil, high gas prices have led to an intensification of the import of nitrogen fertilizers to Poland by 92% over the past two seasons. "After eight months of this year, the increase was 150% in the case of urea imports, and 30% for nitrogen fertilizers," she told the parliament in the beginning of November. "Without regulatory support at the national and EU levels, this will lead, in the long term, to the complete loss of competitiveness for domestic fertilizer producers and production restrictions," she warned.

She also stressed that the growing import of fertilizers from Russia and Belarus was a problem faced by all of Europe. "There is a real risk of replicating the Irish scenario - today, there is no domestic fertilizer production there. The country is dependent on external suppliers, and fertilizer prices in that region have increased," she explained.

Zielińska-Olak underscored that Russian producers achieve several times higher margins on fertilizer sales compared to European producers. "These margins reach 40-50%, while the best European producers generate margins of around 20%, and domestic producers have EBITDA margins between minus 10% and 10%. This shows how difficult the situation is and that urgent intervention is needed," she emphasized.

According to the fertilizer industry, it is necessary to urgently implement mechanisms that effectively protect the domestic market. "A mandatory registration system for importers and producers introducing fertilizers to the domestic market, as part of changes to the Fertilizers and Fertilization Act, specifying the country of origin or producer, will help limit this practice," Zielińska-Olak indicated. She added that the industry also calls for an expansion of the SENT system to monitor the flow of fertilizers and their transit.

The fertilizer industry also believes that inspections should be strengthened at ports and transshipment terminals related to transportation, storage, labeling, and quality of fertilizers.

According to Szymon Domagalski, a legal advisor in the advocacy and legislation division of the Polish Chamber of Chemical Industry, despite sanctions on Russian gas, Poland has contributed 2.6 billion zlotys to Russia's budget due to "gas imports in fertilizers."