50% of the mineral fertilizers market can disappear in Ukraine

Ukrainian farmers can remain without nitrogen fertilizers from Belarus, Lithuania, Turkey, Kazakhstan, Uzbekistan and Georgia, agravery.com reported.

The reason for this is a complete ban on import of nitrogen fertilizers, which came into effect since December 7. It happens under the pretense of contraband control of Russian products. The customs service checks all the goods in order not to miss Russian fertilizers without paying an anti-dumping duty, which, according to DFS press service, makes 29,25% for “Dorogobuzh” plant and 42,96% for all other Russian manufacturers.

 “Blocking fertilizer shipments began after the letter of one of the DFS leaders, sent to all customs of the country. It dealt with the Russian contraband control, but struggle against suppliers from Belarus, Turkey, Poland, Kazakhstan, Bulgaria, Georgia, Lithuania and Uzbekistan began. These countries are nothing like Russia. Moreover, Russian fertilizers cannot be delivered by sea, there’s no point. It is unprofitable. As of December 20, customs clearance of more than 47.000 tons of mineral fertilizers was blocked. According to the experts, it makes 53% of the monthly fertilizers import. These are not final figures, these are the data we have managed to collect for the moment. Today, fertilizer prices in Ukraine are 40% higher than the world prices, and it is without taking into account the influence of import blocking. For example, prices for ammonium nitrate from Kazakhstan, Uzbekistan, Turkey and Georgia vary within 9900-10100 UAH per ton, while the Agrarian Fund sells it at a price of 11200 UAH per ton, "- said Deputy Chairman of All-Ukrainian Agrarian Council Mikhail Sokolov.

 According to the expert, the current situation is similar to price manipulation in the fertilizer market.

 "When it turned out that the countries having nothing to do with Russia, supply fertilizers  making Ostchem’s products uncompetitive, the Agrarian Fund, which had purchased these fertilizers from Ostchem, decided to receive subsidies for the purchase of fertilizers it was offering; after it hadn’t been achieved, we got a complete blockage of import of all mineral fertilizers. It means there is an attempt of redistributing the fertilizers import market. It resembles the situation of Yanukovych times, when one monopoly importer who supplied goods to Ukraine at an agreed price was set using the border guards. It is an attempt of blocking the import of independent importers by state authorities; so that only one player trading at the “right” price remains, "- adds Mikhail Sokolov.

Opinions of experts in this branch differ: someone says that it is profitable for companies belonging to Dmitry Firtash, oligarch. Some insist that the Agrarian Fund is trying to influence the situation because it cannot sell its fertilizers at higher prices.

 "Regarding the recent events with blocking, it seems to me that it is not Firtash who is pressing the issue of the ban, but the Agrarian Fund; since it is the Fund who needs to sell its fertilizers at an overvalued price now. And the Fund merely cannot sell these fertilizers at UAH 11500 UAH per ton, when imported goods are shipped to Ukraine at lower prices. That is why these problems began. I do not see anybody, except the Agrarian Fund, who could take advantage of it, "notes Alexey Dikanyuk,  Commercial Director of the company “Agron”.

 This situation can lead to the decrease of yield and, consequently, to the export of agricultural products.

 "Turkish ships have been kept in Kherson at the Ukrainian customs for more than a week. How can one allow such a situation within the framework of such fertilizers shortage in the Ukrainian market? It will lead to loss of export of agricultural products, giving Ukraine 40% of all currency earnings. Without the export, we will have no money, no means to defend the country, "- said the chairman of the All-Ukrainian Agrarian Rada Andrei Dykun.

 Now farmers are outraged by the state of things, but no significant actions are in evidence. Farmerscan.com will continue to monitor the situation and will surely report of the changes. Keep for updates.