The export of fertilizers will be limited symbolically – Newspaper Kommersant No. 215 (7416) of 11/21/2022

The government is going to extend export quotas for certain types of fertilizers from Russia in 2023. It is assumed that quotas for nitrogen and complex fertilizers in January-May 2023 will be 16-17% below the level of restrictions in the second half of 2022, but will still remain above real exports in the same period of 2021. Experts do not expect that quotas will significantly affect fertilizer producers, and chemists themselves point to the priority of the growing domestic market.

The Ministry of Industry and Trade has prepared a draft government decree providing for the extension of quotas for the export of nitrogen and complex fertilizers from Russia until May 31, 2023. Quotas will be set at 7 million and 4.9 million tons, respectively. The project is posted on regulation.gov.ru. The explanatory note says that the document was developed following a meeting on November 2 with First Deputy Prime Minister Andrey Belousov and Deputy Prime Minister Victoria Abramchenko.

The adoption of such a decision will not come as a surprise to the market: the possibility of extending the validity of quotas in the autumn was already discussed by the heads of the Ministry of Agriculture Dmitry Patrushev and the Ministry of Industry and Trade Denis Manturov, and earlier this option was supported by the government commission on agro-industrial complex.

Initially, export quotas were set at the request of farmers who faced a shortage of nitrogen fertilizers and ammonium nitrate at the end of 2021 (as a result, its export was completely stopped). The new extension will be the third in a row. Quotas are designed to prevent shortages of fertilizers in the domestic market at peak periods of their consumption.

The only exception was June 2022, when suppliers could export their products abroad in any quantity, since the sowing season had already ended in Russia and fertilizers were not in demand. However, the removal of quotas did not cause a sharp increase in exports in July amid logistical problems for chemical companies, although no direct sanctions were imposed on fertilizers from Russia.

According to the Russian Foreign Ministry, the sanctions still led to the fact that from March to September, the export of fertilizers from the Russian Federation decreased by 38% compared to last year, and global consumers lost almost 8 million tons of raw materials. At the same time, the Ministry of Industry and Trade expects that by the end of the year, the total export of fertilizers will remain at the level of 2021 (37.6 million tons).

The level of quotas expected for the next year is 15.7% and 16.9%, respectively, below the restrictions in force for these types of fertilizers from July 1 to December 31, 2022. At the same time, according to the calculations of Nina Adamova from Gazprombank’s CEP, quotas are 30% higher than the actual volume of exports from the Russian Federation in January-May 2021 for nitrogen fertilizers and 9% for complex fertilizers. So, in her opinion, maintaining fertilizer export quotas will moderately limit the export potential of Russian producers. On the other hand, the expert notes, this will help maintain the availability of fertilizers for domestic farmers in the new season.

The Russian Association of Fertilizer Producers (RAPU) noted to Kommersant that it is the domestic market that is a priority for Russian fertilizer producers. Over the past seven years, they note, Russian farmers have doubled their fertilizer consumption to 5 million tons (in the active substance) in 2021. By 2030, the Ministry of Agriculture predicts an increase in this figure to 8.8 million tons.

Now, they say in the RAPU, early deliveries of mineral fertilizers for spring sowing have already begun in a number of regions. At the same time, the organization said, despite export restrictions, the production of the main types of fertilizers in Russia is growing: in January-September, the production of nitrogen and phosphorus fertilizers increased by 6% and 4%, respectively (in physical weight).

Olga Mordyushenko