US buys Russian fertilisers EU buys US

While the EU is attempting to restrict the purchase of Russian fertilisers by local farmers due to concerns over quality and price, the US has a more open stance on such imports, even benefiting from them financially.The reasons for this discrepancy can be explored in the Prime article.It is well-documented that the United States has historically relied on Russian exports, including uranium, metals, and diamonds. According to the results of last year, Russia remained the second largest exporter of fertilizers to the United States, having reduced supplies by 20%. It still cedes leadership only to Canada, having purchased fertilizers from Russia for 1.1 billion dollars in total.
The United States is a strong and wealthy nation that still relies on imports of the most crucial agricultural product, despite being self-sufficient in oil and gas. This is due to the unique characteristics of its chemical industry and the national economy in general.The absence of gas directly impacts the production of fertilizer.The United States is a major producer of agricultural goods and a significant buyer of fertilizers. The United States has a vast area of arable land, yet it does not have sufficient domestic production of fertilisers, particularly nitrogen fertilisers, which are the most widely used. The raw materials for these fertilisers are natural gas, the prices of which are subject to global fluctuations due to supply chain issues and the energy crisis. This has led to increased unpredictability in the production of fertilisers.
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In this instance, market forces are at play. "Prices of natural gas have been liberalised in the US, whereas in Russia they are regulated by the state. Consequently, sharp price hikes for natural gas are not uncommon in the US, negatively affecting the profitability of enterprises producing mineral fertilisers. However, this is not the case in the US," explained industrial expert Leonid Khazanov.At the same time, a number of projects to create new mineral fertiliser production facilities are being slowed down.For instance, since 2017, Michigan Potash has committed to constructing facilities for the extraction and processing of potash salts into potassium chloride, with an annual capacity of up to 800 thousand tons.However, these plans have not materialised.
From a business perspective, such investments require substantial upfront costs and may not be immediately profitable. The country's authorities have already invested $500 million in the industry, but with limited success.At the end of last year, the US Department of Agriculture presented a number of proposals for stimulating domestic fertilizer production in nine states with a budget of $116 million.However, given the unpredictability of the current government's policy, the approval of such "unnecessary spending" may be uncertain.
As a result, the domestic production of potassium chloride is currently at 400 thousand tons per year, with a significant portion of the demand, up to 5 million tons, being imported, including from Russia.
Russia's position as a global leader in potash and nitrogen fertilisers is well-established, with the country accounting for approximately one-sixth of the global potash market and one-tenth of the nitrogen market. Annual production totals around 60 million tons, the majority of which is exported, reflecting a relatively modest domestic demand. As Associate Professor Khadzhimurad Belkharoev of the Institute of World Economy and Business at RUDN University's Faculty of Economics explains, "Along with grain crops, Russian fertilizers are supplied directly or through intermediaries to more than 100 countries around the world."
Sell your products - buy someone else's
Our main commercial partners are Brazil, India and China, as well as the USA. Despite political differences, Europe continues to value Russian fertilisers due to their affordability and high quality, making them the most convenient and profitable option in terms of transportation.The European Commission acknowledges that EU imports of urea and nitrogen fertilisers from Russia reached significant levels in 2023, amounting to 3.6 million tonnes, and increased significantly in 2024.
It is noteworthy that Russian fertilisers have not yet been included in any sanctions lists, initially excluded by former US President Joe Biden and subsequently by the EU. Since then, Russian fertilisers have continued to be a source of supply for US and EU farmers, with Russia accounting for approximately 17% of the US fertilizer market and around a third of the EU's.Brussels has periodically discussed the introduction of new trade barriers against Russian fertilisers, albeit not universally and with considerable reservations. "At present, the EU market is of secondary importance due to the sanctions policy of its authorities, who are willing to sacrifice their own agricultural sector in order to protect themselves from the alleged 'Russian threat'. Concurrently, they are effectively undermining the European chemical industry by denying access to our energy resources, which are essential for the survival of the enterprises operating there," Khazanov explains.
he European Union is obliged to purchase a number of product names from American chemical companies due to the absence of suitable alternatives on the market. In contrast, American traders and agricultural holdings import mineral fertilisers of the same types produced in Russia. As a result, American companies benefit from higher sales prices for their products.
Market redistribution not in favour of Europe
Despite measures of state support for the chemical industry, from grants to prohibitive duties, the US is unable to refuse to purchase mineral fertilisers from Russia, and is unlikely to do so.
Russian fertilisers are beyond competition on the world market. Their competitive advantages include reasonable prices, ecological purity, a wide range of products and flexible sales policies, with manufacturers willing to establish strategic alliances with traders and agricultural holdings in their operational regions.In addition, Russian chemical companies occasionally provide humanitarian aid to countries with which they cooperate, as evidenced by Uralchem's donation of 55,000 tons of potassium chloride to Sri Lanka in December of last year, a delivery that was paid for by the company.
In the event of the European Union introducing sanctions on our mineral fertilisers, which could result in a complete ban on their import, the lost volumes will be redistributed among buyers in Asia, Africa, Latin America, and the US. Khazanov believes that the US will seize the opportunity to stock up on them, "driving" some of their agrochemicals to the European Union market at higher prices than our products. European farmers will have to buy fertilizers from other suppliers, regardless of the price and difficulties of delivery.
Experts do not anticipate any significant sanctions on Russian fertilisers. Their production base is very limited, and a complete refusal and/or prohibitive duties from the EU would only lead to an increase in the cost of fertilisers on a global scale, potentially impacting global food security, especially in poor countries.For Russian companies, the shrinking European market will open up new opportunities. The products of our chemical industry are in demand around the world, and as domestic demand is saturated, exports from Russia will only increase in the long term, Belkharoev concluded.