Sanctions cripple the Russia’s fertiliser industry

Due to Western sanctions Russian fertiliser producers have been pushed to downsize their investment programmes many times over, Andrey Guryev, head of the Russian Fertilizer Producers Association (RAPU) said during a press conference in Moscow on June 17.

Lack of imported equipment takes a heavy toll on fertiliser production in Russia, Guryev admitted.

"We used to import entire factories, but now we cannot get even bearings and pumps. And this is all seen over the country."

Andrey Guryev, head of the Russian Fertilizer Producers Association

In 2021, RAPU forecasted investments of over 2 trillion roubles ($35 billion) to be allocated in the expansion of the Russian fertilisers production in the course of the next several years.

Fertiliser exports are hit

In addition, Western restrictions have severely hampered the Russian and Belarusian fertilisers export, Guryev said, suggesting that fertilisers must be recognised as humanitarian goods in order to mitigate a global food crisis.

“The problems that we, fertiliser producers in Russia, have faced are actually [come from] sectoral sanctions. The 4 largest companies operating in Russia, plus [Belarus fertilisers producer] Belaruskali, cannot fully supply their products to developing countries,” Guryev said, explaining that among other things Russian exporters experience problems with collecting payments for delivered goods stemming from the sanctions against the Russian banking sector.

Harvest in jeopardy

If Russian and Belarussian fertilisers do not reach their customers, the 2022/23 grain harvest is likely to be in trouble, Guriev said. This would spark a tremendous food crisis, he added.

The lack of Russian fertilisers on the global market has not only caused a spike in prices but has also resulted in their shortage in some places around the world. Guriev estimated that sanctions have nearly halved Russian fertilisers export. Before the Ukraine crisis, the country exported roughly 3 million tonnes of fertilisers monthly.

Logistics is under scrutiny

Russian fertiliser producers have been struggling to rebuild logistics, re-directing trade to the railway and small ships, as large sea cargo carriers have suspended calling the Russian sea ports.

“Companies have not restored exports. Things differ from company to company and from product to product,” Guryev said, estimating that since the beginning of the year Russian fertiliser exports dropped by 20% in a year-to-year comparison.

“If companies can cope with the sanctions pressure and start normal shipments, then we will reach a normal level of exports by the end of the year. I hope we will succeed because today a lot of effort is being made to beat this goal,” he added.