In spring, there may be a shortage of fertilizers – Laws and regulations

Today, the Parliamentary Committee on Agriculture and Rural Development debated on “the unjustified increase in the prices of fertilizers used in agriculture and the plan to counteract the above-mentioned increases, which the Polish government is going to implement.”

Since February, farmers have been trying to interest the Ministry of Agriculture in increasing fertilizer prices. Meanwhile, after half a year, the ministry informs about the same, which has been known for a month – this is how MP Dorota Niedziela, one of the candidates for today’s KRiRW deliberations, summed up today’s speech by Deputy Minister Anna Gembicka, delivered during the session of the Parliamentary Committee on Agriculture and Rural Development.

More about the previous information about the prices of fertilizers presented in the Sejm by the Ministry of Agriculture and Rural Development:

When will fertilizers get cheaper?

The chairman of the committee, Robert Telus, assessed that the problem of fertilizer prices is a European problem and requires EU intervention.

Therefore, the deputies inquired about the government’s initiatives to compensate for the increase in fertilizer prices, reported to the EU, and about the analysis of the reasons for the increase in fertilizer prices and food price forecasts held by the Ministry of Agriculture and Rural Development. Taxes are also a large part of the price of fertilizers, they pointed out, suggesting their reduction. Intervention in the EU or blaming the EU is of course possible, but it will not bring any results, while national solutions are more certain – suggested MP Mirosław Maliszewski. Kazimierz Plocke, MP, asked about the effects of the announced group purchases and UOKiK’s activities. MP Jarosław Sachajko expressed his surprise that there was no representative of the Ministry of State Assets during the committee’s deliberations. As he assessed, the reduction in VAT would result in the purchase of Polish fertilizers by other EU countries. He reminded that for years there has been talk of the need to produce Polish protein – this would allow for limiting, for example, the use of nitrogen fertilizers. The MP expects farmers to be able to buy fertilizers directly from producers. UOKiK should already know the results of the conducted control – he stated. The scare with an increase in food prices is unnecessary, because prices will increase, but the farmer’s share in this price is important – and this share is taken over by corporations.

The chairman, Robert Telus, stated that representatives requested by the deputies requesting information had been invited – and according to the request, only the Ministry of Agriculture and Rural Development was supposed to present it.

Zbigniew Ziejewski, MP, asked about the reason for the lack of fertilizers on the market when it was known that fertilizers would become more expensive. The farmer’s food prices have not increased, and the production costs are rising – he said.

Tomasz Hinc, President of the Management Board of Grupa Azoty, explained that currently 80 percent. fertilizer prices are the cost of gas, 20 percent. remains on the other price components. Polish fertilizers are cheaper than others – he said. Competition often ceased production, which proves that the business risk assessment is high. Agrochem Puławy sells fertilizers at producer’s prices, he noted. The producer’s price list is published on the website, which also affects the market, he emphasized. Gas prices will not fall until spring, and in the absence of competition production, one has to take into account a shortage of fertilizers. You have to buy fertilizers systematically – he advised and encouraged farmers to buy.

MP Zbigniew Dolata argued about the hypocrisy of KO MPs who did not oppose the EU’s energy policy, negotiated expensive gas and wanted to transfer the production of fertilizers to the Russians. He asked about the role of intermediaries in increasing fertilizer prices.

The Grupa Azoty Group has 70 authorized distributors, farmers can choose from, emphasized the president. Production continues, although it is risky. Price lists are on websites – so you can judge how much the distributors earn. Today no plants sell fertilizers at the gates, he said. The situation affects not only Europe, Russia limits exports, and so does Turkey. Cheaper Polish fertilizers do not mean that they will not be exported from the country, he assessed. There may be a shortage of fertilizers, he repeated.

MP Sebastian Kaleta pointed to the possibility of limiting the export of fertilizers.

Anna Wojciechowska, MP, emphasized the predictability of the current situation – for example, the increase in energy prices is higher in Poland than in other countries, and so is inflation. The increase in commodity prices was predictable – where is the diplomacy and services that should translate the situation into Polish conditions? What are the plans and forecasts for prices and costs in the spring? – asked the MP.

MP Lech Kołakowski declared that everyone cares about low fertilizer prices. The Management Board of Grupa Azoty is in a difficult situation, whatever it does, it will be wrong – said the MP. The situation is serious. As he stated, he himself analyzes the legitimacy of price increases. It is important to maintain Azoty, he said and emphasized the role of sales regionalization.

MP Krystyna Skowrońska, deputy chairman of the Public Finance Committee, pointed to the high prices of fertilizers and asked why these prices had risen so much since February. The promises that were made need to be corrected – she pointed out. It is not only the negligence of the previous government that affects today’s situation. The current prime minister agreed to the EU’s energy and climate policy, she said. Poland was compensated for high gas prices as a result of an application submitted in 2014 – she emphasized. The increase in VAT will be important for small farms – she emphasized. Purchasing groups are not created, although they were announced. There are no ideas for solving the current situation in the presented government material. There is no support for farmers. Purchase prices are not rising. When and what decisions will be taken to reduce fertilizer prices? How much and how is fertilizer exported? Low production of fertilizers causes an increase in demand, but prices are also dictated by middlemen and distributors – and there is no analysis of this situation. The cost-price ratio is deteriorating and nothing has been done to stop it. The information presented does not deserve approval, the commission should be held once again in the presence of the Minister of Agriculture, who should present his intentions.

The price level is also dangerous for the producer – the president of Hinc pointed out and assessed that the producer cares about a long list of distributors. The costs are significant – from 30 to 80 percent. the share of gas in the price of fertilizer increased, said the president. “Azoty” did not limit or suspend production – he emphasized and added that Polish farmers are the most important for the producer. However, production costs must be covered.

MP Stefan Krajewski pointed to the need to develop solutions that will protect the farmer.

MP Jarosław Sachajko asked about guarding the borders in the EU – whether cheaper food will not flow to Poland and what will the Ministry of Agriculture and Rural Development do to increase the share of farmers in the price of food.

MP Zbigniew Ziejewski assessed that distributors have lower prices than those published by the plant on its website. The farmer’s costs have risen – who will pay them? Let us raise the prices of agricultural products, he appealed.

MP Piotr Borys said that a VAT reduced to zero for the producer would lower the prices of fertilizers.

Deputy Dorota Niedziela indicated that the MAP should be present during the meeting of this committee – just as the president of Azoty came without being invited by the applicants. The committee should come to solve the problems – and the deputy assessed that the Ministry of Agriculture does not have such solutions. She demanded a written reply from the ministry. She showed concern at the announcement that there might be a shortage of fertilizers in the spring.

MP Dolata reminded that the NIK report regarding the consent to the unfavorable gas purchase is declassified.

MP Kazimierz Plocke asked about the reason for the improvement of the situation of “Azoty”, despite the reported difficulties.

Social side marginalized?

These are the afterword. What about the social side?

Sławomir Izdebski, as the chairman of OPZZRiOR, stated that the commission was convened at a time when farmers had to take care of the farm and recalled the times when the social side started the commission’s deliberations, not the deputies. As he stated, the social side is now made to wait. Nothing can be done because the problem is global. Whether saltpeter will cost a little less or not, the farmer will not buy it, because it will be too expensive anyway – he assessed. There is no fertilizer available to farmers at these prices. Fertilizer prices are too high. Perhaps the shutdown of fertilizer production is obvious, since it means lower demand for gas and forces its prices to fall. There may be a cheaper fertilizer at an intermediary’s than at the producer’s, since it could have had prices negotiated earlier. Farmers don’t have the money to buy fertilizers, he stressed and suggested stopping production rather than encouraging farmers to buy fertilizers now at high prices.

The chairman of the parliament, Robert Telus, pointed out that there was no malice on the dates when he summoned the committee.

Robert Nowak, representing the board of the National Council of Agricultural Chambers, stated that after the intervention in the spring, Grupa Azoty indicated that it was analyzing the price of fertilizers in relation to the prices of products. Meanwhile, the price of wheat increased by 30% and the price of nitrogen fertilizers by 100%. It is unacceptable for farmers, such price differences have not existed yet. Will there be a developed relationship mechanism between these prices?

It will be worse?

Responding to these comments, Deputy Minister Anna Gembicka thanked for the opinions expressed. As she said, the Ministry of Agriculture and Rural Development invited UOKiK and MAP to today’s committee meeting. Deputy Prime Minister Henryk Kowalczyk could not be present today due to other duties. MARD appealed to the European Commission to develop a compensation system for farmers. Some countries were against interventions following the increase in gas prices. The application was sent to UOKiK, the inspection may provide information for the future related to distribution costs and price formation. De minimis limits do not allow domestic actions to compensate for the increase in prices. EU mechanisms were requested twice. VAT cannot be reduced to a zero rate without the consent of the European Commission – she emphasized. We are members of the EU and the free movement of goods is imperative. Food prices can be simulated, forecasts can be prepared, but this has no effect on gas prices. Subsidies for protein plants will increase – the deputy minister announced.

The president of “Azoty” Tomasz Hinc added that transactions for groups of farmers are being conducted – such transactions take place throughout the country. The good results of “Azoty” are the result of various types of production. Profitability on the fertilizer market is low, he said. This is a crisis on the gas market, not the fertilizer market, he said. Limiting production would mean limiting the availability of fertilizers on the Polish market. The suspension of production is Russia’s expectation. If we stop producing, Russia will fill the gap. It is a consent for Russian gas to enter the EU in the form of fertilizers, he said. Publishing price lists for fertilizers is to oppose attempts at speculation. Azoty has a 60% market share. High commodity prices are as big a problem for them as they are for farmers. Hence the appeal to spread purchases in installments, especially as wheat prices are rising at a record high.

MP Telus assessed that the establishment of the Agrochem company resulted in the suspension of the increase in fertilizer prices.

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About Eric Wilson

The variety offered by video games never ceases to amaze him. He loves OutRun's drifting as well as the contemplative walks of Dear Esther. Immersing himself in other worlds is an incomparable feeling for him: he understood it by playing for the first time in Shenmue.

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