EU Proposes Slashing Fertilizer Tariffs

The one-year suspension of duties applies to key nitrogen fertilizers like ammonia and urea. This move is structured through duty-free tariff rate quotas, meaning imports up to a certain volume will be tariff-free, while amounts beyond the quotas will face standard MFN duties. The policy is specifically designed to diversify the EU's supply away from Russia and Belarus. This isn't the EU's first intervention. In December 2025, the Commission adjusted the Carbon Border Adjustment Mechanism (CBAM) for fertilizers, reducing its immediate cost impact on imports. These actions address the sharp rise in fertilizer prices, which for nitrogen-based types jumped 149% between September 2021 and September 2022, driven by soaring natural gas costs. While prices for fertilizers and soil improvers saw a moderate increase of 5% in 2025, input costs remain a significant concern for the agricultural sector. For rice producers, high fertilizer costs are a critical issue, sometimes accounting for over 10% of total farming expenses. Surges in nutrient prices have previously forced some Asian farmers to cut back on fertilizer use by 10-20%, risking lower yields. The International Rice Research Institute has warned that a sustained 10% drop in fertilizer use could lead to a 36-million-ton loss in rice production, affecting the food supply for half a billion people. The tariff suspension could benefit major fertilizer exporters to the EU like Egypt, Algeria, the USA, and China. In 2023, Russia was the second-largest supplier of nitrogenous fertilizers to the EU, a dependency the new policy aims to reduce. This shift in trade dynamics may create new supply opportunities for other producing nations. In Europe, demand for specialty and organic rice is on the rise, with the organic food market projected to hit €50 billion. The overall European rice market was valued at approximately $7.8 billion and is expected to grow. Consumers are increasingly drawn to premium varieties like Basmati and Jasmine, as well as sustainably certified and traceable products. This policy shift coincides with Vietnam's strategy to boost high-quality rice exports to the EU under the EVFTA, which grants an 80,000-tonne duty-free quota for its rice. Vietnamese exporters are targeting the premium segment, with some specialty rice fetching over $1,200 per ton in Europe. This focus on value over volume aligns with the growing European demand for high-end and sustainably sourced rice. The Thai baht has seen some fluctuation against the euro. Over the last six months, the exchange rate has moved between approximately 0.0261 and 0.0275 euros to the baht. Recently, the rate has been around 0.0273. Currency movements are a key factor for Thai exporters in pricing their products competitively in the European market.