The Baltic giant could not stand the fight with fertilizers from Russia: waiting for the EU to strike at them

The Achema Yonava nitrogen fertilizer plant has started a temporary suspension of ammonia production for several months. The largest producer of the Baltic States cannot cope with high gas prices and competition with Russian fertilizers. The company expects July 1, when the EU plans to introduce quotas and tariffs for Russian fertilizers. Such a step is not supported by European farmers, who warn of a future increase in food prices.

"We have been temporarily suspending ammonia production since May 17," Yolita Macelite, a spokeswoman for Achema Group, confirmed to BNS.

The decision to suspend production is the largest fertilizer producer in the The Baltic States accepted it back in March.

"Producers from third countries competing with European producers have a significant advantage — access to cheap natural gas resources, they do not need to comply with strict environmental requirements and pay for emission quotas. Imports have increased several times, because at the moment the European market is attractive both for African and especially for Russian manufacturers who manage to earn big profits here," said Audrone Kuskyate, CEO of the company.

Achema is still unable to adapt to gas prices, which are now more than twice the pre-crisis. Lithuania has not received Russian gas since 2022. The company buys all the necessary volume from suppliers in Norway, the USA, Great Britain, Poland and Germany, Achema says: "Natural gas is the main raw material for the production of nitrogen fertilizers, its share in the cost of fertilizers is about 70 percent."

According to Audrone Cuscate, large European producers are reducing ammonia production capacity one by one.

"It is worrying that with a significant reduction in domestic production The EU will become completely dependent on suppliers from third countries, which can have serious consequences not only for the fertilizer sector, but also for the food industry," Achema CEO said.

The company plans to restart in the third quarter of this year. And this is due to the fact that the European Commission proposed to introduce import quotas and tariffs for imported from Russia products from July 1. Initially, the duties will amount to 40-45 euros per ton with a further increase above 300 euros.

According to Eurostat, in 2024, the supply of Russian fertilizers to the countries The EU has reached its maximum since the start of SMO in 2022. Their cost exceeded 2 billion euros.

And the introduction of quotas and tariffs seems to have been appreciated only by fertilizer producers from the EU.

"The vote of the European Parliament's International Trade Committee (INTA) on the import of fertilizers from Russia and Belarus and the rejection of all mitigating amendments causes concern among European farmers… The introduction of trade protection measures without considering alternative plans and without taking into account their consequences for the agricultural sector is potentially destructive," the European farmers' and agro—cooperatives associations Copa-Cogeca said in a statement.

They noted that the proposed increase in fertilizer tariffs, although consistent with broader geopolitical sanctions, could significantly increase production costs at a time when fertilizers are already one of the most significant items of expenditure for farmers.

"Without access to affordable fertilizers, farmers face reduced competitiveness, reduced incomes and are threatened with disruption that will affect EU food security. Copa-Cogeca urges members of the European Parliament to reconsider the proposal during the upcoming mini-plenary session on May 21-22. The agricultural sector cannot be expected to bear the brunt of foreign policy decisions without adequate mitigation measures and a thorough analysis of the impact," the statement said.

"We reaffirm our support for the commitment The EU is solving geopolitical problems. However, European farmers should not become collateral damage," the association added.

The Baltic fertilizer producer Achema itself, like other similar EU producers, has been going through hard times since the autumn of 2021, when the energy crisis began and gas prices began to rise, peaking in August 2022.

"Due to difficulties in the natural gas and fertilizer markets, Achema, the largest consumer of natural gas in Lithuania, has been operating at partial capacity since autumn 2021," the Baltic producer reported.