The limitation of fertilizer exports from Russia may seriously hurt some producers
On December 1, 2021, the export of mineral fertilizers from Russia will be limited. As follows from the decree, by the end of May 2022, domestic producers will be able to export no more than 5.9 million tons of nitrogen fertilizers and 5.35 million tons of complex fertilizers. The imposed quotas are designed to protect domestic farmers from the rise in prices for mineral fertilizers, however, they can hurt some manufacturers specializing only in these products, including a unique plant located in the Stavropol region.
The limitation of exports is an expected response of the Russian government to an increase in the cost of fertilizers in the domestic market. Even though the largest chemical companies froze prices for their products until December 31 this year, the cost of fertilizers is still increasing, probably due to intermediaries who didn’t undertake any obligations to restrain the prices.
The limit is close to the export volumes of the domestic companies and shouldn’t cause any severe problems. At the same time, for enterprises like the Almaz Fertilizers plant (city of Lermontov, Stavropol region) the imposed quotas threaten a real disaster.
Almaz Fertilizers is the only enterprise in Russia producing water-soluble monoammonium and diammonium phosphate, which are used for growing vegetables in greenhouse complexes. The company fully provides domestic consumers with this product and exports the residues.
However, there was a mistake many years ago during the registration of codes for these fertilizers. And now monoammonium phosphate and diammonium phosphate are understood to be two different products — water-soluble and granular.
Russia produces about 5 million tons of granular monoammonium and diammonium phosphate, which is not enough for domestic farmers. However, monoammonium and diammonium phosphate are in excess in the market, and Almaz Fertilizers ships the extra volumes to foreign consumers.
There is no need to impose quotas on the products of Almaz Fertilizers. If the plant had to apply for a license for each shipment (which are 25-30 per month), the export process would be drowned in documents and timely shipments wouldn’t be possible at all.
Thus, the quotas imposed on the water-soluble monoammonium and diammonium phosphate will force Almaz Fertilizers to decline its exports. The enterprise will have to decline the loading of its production units, which will lead to a decrease in tax payments and job cuts. And finally, that will cause social issues in the city of Lermontov.
Right now the enterprise is in a situation of complete uncertainty, and the management of Almaz Fertilizers hopes that the final decision on quotas will not cause economic damage to their unique plant.