The war in Iran is making its effects felt in Luxembourg’s agricultural sector, with nitrogen fertiliser prices rising sharply since 28 February. Having already been relatively high at between €330 and €340 per tonne last autumn, prices have since climbed a further 30 percent, leaving farmers paying up to €440 per tonne.
The timing has proved particularly costly for those who chose not to stock up in the autumn. Serge Turmes, director of the agricultural cooperative De Verband, estimates that around 70 percent of farmers did buy ahead, but that many held back due to the price at the time, a caution that is now proving expensive.
Fertiliser prices are not directly tied to oil, but they are closely linked to gas, as Turmes explained. Producing nitrogen fertiliser requires gas, and with a large share of global gas supply coming from the Middle East, the conflict has driven energy costs upward across the board, pulling fertiliser prices with them.
What has raised eyebrows, however, is the speed of the price rises. Costs began climbing almost the moment the first bombs fell, prompting suspicion that the situation is being exploited for commercial gain. Turmes was candid on this point, noting that industry had clearly moved to capitalise on the situation, with prices surging on the very first day of the war, despite no expensive fertiliser having actually been purchased that day.
Turmes added that for as long as the cooperative still holds cheaper stock, it can offer members an intermediate price, but once it is forced to purchase at current market rates, those costs will be passed on directly to customers. With spring now accounted for, prices are unlikely to fall in the near term. There is some possibility of speculating on summer purchases, though demand for nitrogen is lower at that time of year.
Simply using less fertiliser is not a viable option for farmers, as reduced inputs would mean smaller harvests. In theory, a greater reliance on organic fertilisers such as manure and slurry could offer an alternative, but Christian Wester, president of the Luxembourg Farmers’ Union, explained that the Nitrates Directive stands in the way.
Wester argued that the benefits of organic fertiliser are most pronounced on grassland, though the regulatory restrictions apply equally to both grassland and arable land. Therefore, he believes that organic fertiliser could be applied more generously on grassland without compromising nature conservation or water protection, and that doing so would reduce dependence on mineral fertilisers. However, this is not currently permitted under existing regulations, forcing farmers to buy additional mineral fertiliser to make up the shortfall and maintain both yields and the quality of feed for their livestock.
Wester saw little prospect of the Nitrates Directive being relaxed in response to the current situation, describing it as a complex regulatory mechanism. While a revision is under way, he cautioned that such processes take years, and that nothing can realistically be done in the short term.
To put the current situation in perspective, nitrogen fertiliser prices remain significantly lower than they were four years ago. When the war in Ukraine began, the price reached €950 per tonne, more than double what farmers are paying today.
