Nitrogénművek calls for action over high gas prices

Pétfürdő, 6 October 2021, Wednesday (OTS) - Nitrogénművek supports the statement of industry association Fertilizers Europe calling on the European Commission and Member States’ authorities to take immediate action to address the critical situation on the fertilisers market. The statement is available at the following link:

Zoltán Bige, as Chairman of the Trade and Economic Committee of the European Fertilizer Manufacturers Association and Chief Strategy Officer of Nitrogénművek Zrt., expressed his concern over the closures announced by producers in the industry, as a result of which the optimal start of the new agricultural season could become uncertain. In addition to the increase in costs, the supply of nutrients falling behind last year’s level could cause a far bigger problem, he said. Because of this, the yields of 8-9 tonnes per hectare of wheat and over 10-12 tonnes per hectare of corn expected today will become unachievable. Many don’t take it into account that nitrogen replacement only becomes effective after a certain level, not to mention the fact that in the presence of easily available nutrients, plants can utilise water much more efficiently than if they were “starving”. Experts are already aware of the problem, but so far few are voicing their concerns. Several Member States are already preparing a package of measures to address the situation, but this has not been the case in Hungary so far.

Zoltán Bige believes the matter needs to be addressed on two levels. One is to find a solution to ensure immediate security of supply. “We have always believed in local production as this is the optimal supply model. We need to use local infrastructure and reduce logistic costs to the lowest possible level – and here I mean not only forints but the environmental footprint as well. The second level is the increasingly unfavourable investment environment. In this respect, Europe’s competitive position has declined significantly, with high energy prices and rising environmental costs not attracting investors, even though this would be much needed for the targeted carbon neutrality. In Western Europe, governments are offsetting the unbalanced competitive environment with national funds, which ­(again) ­has not yet been the case in Hungary. This is what should be tackled after the short-term measures that need to be taken over the high gas prices, if we are to maintain the competitiveness of our agriculture in the long run,” Bige said.

Bige pointed out that importing fertilisers from outside of Europe would not provide a solution to the current situation due to the extreme seasonality of the product and the increasing logistics challenges. European imports cannot keep prices under control on a tight market as European prices will be determined by the European producer with the highest cost, thus maximising the margins of non-European producers. Nitrogénművek has favourable cost levels, well-diversified markets and an ideal product portfolio, but the current gas price makes the company’s executives cautious. The company’s continuous operation is at present ensured by increased demand from export markets. In the current situation, they can even reach the Netherlands with their “Pétisó” calcium ammonium-nitrate product, of which they operate in Hungary 10 percent of the European Union capacities.