On March 25th, Intercéréales held its 17th Export Morning in Paris on a topic directly related to current events: the resilience of the cereal sector in the face of geopolitical shocks. Since February 28th and the American-Israeli strikes on Iran, the Strait of Hormuz has remained almost paralyzed, and the escalation of the conflict threatens traffic in the Red Sea, exacerbating disruptions in the energy raw materials exchanges. In one month, gas prices have soared, leading to increases in nitrogen fertilizer prices.
Despite a temporary lull in energy, the fertilizer market remains solidly on the rise in an explosive geopolitical context, as detailed by analyst Nicolas Pinchon on Terre-net on March 31st.
The war in the Middle East and the Near East reveals the structural dependence of French operations on the global fertilizer market. France consumes 7 to 8 Mt of fertilizer per year, with 70% being nitrogen fertilizers produced from gas. Phosphorus and potash are natural mineral materials extracted from deposits. In Europe and France, these elements are mostly imported, thus subject to supply chain disruption crises, summarizes Maxime Godart, general manager of Timac Agro France.
He emphasizes the importance of sulfur in the chain, essential for solubilizing phosphorus and making it assimilable by plants. The blockage of the Strait of Hormuz puts a lot of pressure on access to available phosphorus, causing supply disruptions for all fertilizer producers worldwide.
In addition, there is a balancing effect in terms of supplies. Brazil consumes nearly 50 Mt of fertilizer per year, while India and China consume 40 Mt each. When these countries are no longer supplied via Hormuz, they turn to historical sources in Europe: Egypt, Algeria, Morocco. This creates direct competition.
Amidst these geopolitical tensions, there is an overlay of a specifically European regulatory pressure: the Carbon Adjustment Mechanism at the border (CAM). Voted in 2022 and effective on January 1st, 2026, this mechanism imposes a carbon price on products imported into the EU, including nitrogen fertilizers, steel, aluminum, and cement.
The discussions at the event highlighted several key action points to secure sustainable access to fertilizers and reduce market tensions. These include diplomatic relations with producing countries, regulatory stability, agronomic efficiency, and production relocation to diversify sourcing and ensure long-term security.
The stakeholders emphasized the need for a strategic approach to reduce dependence on imports and promote sustainable agricultural practices. The potential risks associated with Seveso related to the storage of nitrogen fertilizers were also discussed, along with the idea of utilizing underexploited military lands for fertilizer storage or production unit development.
Antoine Hacard stressed the necessity of localizing fertilizer production in France, highlighting the temporal mismatch issue that may impact the future competitiveness of the industry. He underlined the importance of addressing factors that could affect the production capacity and competitiveness in the long term.
Overall, the discussions focused on the challenges and potential solutions to ensure a stable and sustainable fertilizer market amidst geopolitical and regulatory uncertainties.
