/ world today news/ Recently, the Prime Minister of Russia, Mikhail Mishustin, with the consent of President Vladimir Putin, limited the export of mineral and mixed fertilizers from Russia for half a year (from December 1 to May 1). Some media hastened to write “banned” (and on the stock exchange the shares of Russian fertilizer producers fell by 3-5%), but this is not true.
Just maximum export volumes are limited for nitrogen fertilizers at a level of no more than 5.0 million tons and for mixed fertilizers at no more than 5.35 million tons. For comparison, during the first seven months of the current year, an average of 1.1 million tons were exported per month, that is, 6.6 million tons were obtained in half a year). The reduction compared to the previous period will be just over 10%.
Moreover, all this is agreed with the producers themselves, and the export quotas, as I understand it, will be distributed proportionally in the market between each of them. I have a reasonable suspicion that manufacturers only enjoy such restrictions.
To understand, see the following graph
(GRAPHICS)
First, compared to the previous year, exports in tons fell by much more than 10% (by almost a third). At the same time, secondly, foreign currency earnings have increased significantly (more than one and a half times).
Obviously, this trend will continue with a further decrease in the volume of fertilizer exports. The export price of gas is rising, so European fertilizer producers are either forced to significantly increase the price of the final product, or even temporarily stop and close their production (this is already happening). On this background the deficit of fertilizers will increase, including due to the introduction of the aforementioned quotas, and the price of fertilizers will continue to rise. So is the total revenue.
To produce and transport less, but make more profit is the dream of every producer (“Gazprom” has almost the same joy from the European market now).
Again not so long ago, the European Union introduced sanctions against “Belaruskali”, thereby further reducing the supply of fertilizers on its market. Shooting in the foot is a favorite sport not only of Ukrainians, but also of European officials in Brussels in recent years. It always happens when politics is at odds with economics.
At the same time, domestic Russian gas prices remain at the same level, which means that there is no reason to raise fertilizer prices on the domestic market. And the introduced quotas guarantee that it won’t happen. On the contrary, due to a decrease in the volume of exports in the domestic market, the price may slightly decrease – due to an increase in supply.
Thus, the government solves several problems at once. Not only ensure food security and ensure that the prices of food products grown in Russia do not rise. But it also puts additional pressure on the European market, increasing the deficit and provoking a further rise in fertilizer prices.
That is, either buy Russian gas from Gazprom at a higher price and produce expensive fertilizers yourself, or buy a smaller volume of fertilizers at a higher price. Both options create problems for EU agriculture.
My colleagues and I did a kind of brainstorming and tried to simulate the actions of the Europeans.
Option 1. EU countries agree with each other and the EU centrally allows all its member countries to increase agricultural subsidies. In this case, the problem will be flooded with money (which will go to Russia one way or another). But such a scenario is unlikely, as Europeans have recently failed to reach an agreement on almost any issue, including monetary ones.
Option 2. The countries of the European Union do not agree with each other, but individual countries are beginning to violate common European regulations and subsidize their agriculture themselves. This will create an additional competitive advantage for their manufacturers and cause resistance and protests from others. As a result, tensions and the number of conflicts in the EU will increase.
Option 3. The authorities in Brussels are shouting “We will die, but we will not submit”, and next spring, in addition to energy shortages and financial problems, Europe will be gripped by a food crisis.
We (who thanks to sanctions and import substitution have achieved self-sufficiency in food security and export everything – gas, fertilizers, grain and meat) are happy with all scenarios.
We chew a sandwich, smile and wave.
Postscript: Back in August, I predicted how the development of events in communication with the Europeans would look like.
“-Are you saying that you will not recognize our elections?
– Yes, no! Are you listening, damn oppressors of pregnant Chechen gays!
– Well okay. And gas for 540 dollars for 1000 cubic meters will you buy!
– I will.
And cried.”
The reality turns out to be even more wonderful. And the price of gas is higher, and besides, the deficit has started to creep along the chains.
Translation: V. Sergeev
#Alexander #Rogers #limit #export #fertilizers #Russia
