- EU insists it has not put sanctions on food and fertilizers from Russia
- Malawi receives the first consignment of 20,000 tonnes of Russian fertilizers
- The EU, UN might consider releasing more fertilizers and food embargoed at European ports to Africa
The EU insists that food and fertilizer are not part of the sanctions it has imposed on Russia due to the ongoing conflict with Ukraine, yet the global supply of much-needed fertilizer is in short supply which begs the question; is Russia hoarding fertiliser supplies?
While the EU says it is not to blame, Russia says it is the Western sanctions that are causing the decrease in fertilizer exports. It only makes sense that Russia would hold back fertilizers to increase its own domestic food production in the face of future uncertainties in the still very volatile situation.
The sanctions on other sectors of Russia’s economy are spiralling to the fertilizer industry. Reports show that ‘…some shippers, banks, insurers and other companies involved in the transport or purchase of Russian grain and fertilizer have been reluctant to do business with Moscow, fearing they could run afoul of the sanctions,’ the VOA reported recently.
While the tug of war for power persists, Africa is suffering, millions are starving and with late or no supply of fertilizers ahead of the coming rain season, millions will die of hunger.
Other sectors like the banking system are an essential cog in the supply chain of fertilizer. One of Russia’s biggest lender, Sberbank (SBRCY), saw a decline of profits by 80 percent in what the CEO described as ‘the most difficult year’.
Banks in Russia have been maintaining a code of silence following executive orders from Russian authorities to limit disclosures and dividend payments in a bid to maintain their financial stability in the face of overwhelming sanctions.
If the state-owned lender Sberbank is any measure, then the sanctions on Russia have taken a hefty toll with the bank reporting annual profits being down by US$396 million.
Malawi receives its first fertilizer consignment from Russia
However, despite these headwinds, Moscow says it intends to hold up its pledge to support least developed nations around the world. It is on this note that Russia has sent 20,000 tonnes of fertilizer to Malawi.
The EU imposed import and export restrictions on Russia excludes ‘products primarily intended for consumption and products related to health, pharma, and food and agriculture.’
The EU maintains that the export and import restrictions imposed on Russia are only ‘designed to maximize the negative impact of the sanctions for the Russian economy’ but not to ‘harm the Russian population.’
In his comments on Russia’s export of fertilizers to Malawi, Russian ambassador to Malawi (and Zimbabwe ) Nikolai Krasilnikov said the move by Moscow is in response to Africa’s ongoing grave shortage of food that sprouted from the conflict with Ukraine.
“There is a global crisis of rising food costs and we hope this fertilizer will help farmers realize better yields either from rain-fed agriculture or irrigation,” he told local media.
On Malawi’s side, the Minister of Agriculture, Sam Kawale said the “Malawi Government reached out to World Food Programme (WFP) to assist in the procurement of fertilizer for our Affordable Input Programme (AIP) and managed to get Russia’s support.”
The minister acknowledged that Malawi is actually one of the first (if not the only) African country to receive exports from Russia within this sanction period on the Kremlin.
U.N. spokesman Stephane Dujarric said, the consignment “…will be the first of a series of shipments of fertilizer destined for a number of other countries on the African continent in the coming months.”
However, the pressure of the sanction still weighs on Russia and its dependants. For example, the 20,000 tonnes of fertilizer are only a portion of the intended consignment, and another 10.000 metric tonnes were embargoed under the sanctions.
“The initial fertilizer consignment was 30,000 metric tonnes but 10,000 of it is held up due to sanctions the country is facing following the conflict with Ukraine,” revealed the Russian Ambassador.
“Malawi is the first of other targeted African countries to benefit from Uralchem-Uralkali fertilizer from Russia,” said the Malawi Minister of Agriculture.
The move by Russia comes a few months ahead of the anticipated second Russia-Africa summit that will be held under the humanitarian and economic forum in Moscow this July.
Russia fertilizer cargo to Africa: Donation or under-sell?
The consignment to Malawi from the Kremlin is part of 260,000 metric tonnes of fertilizer that was embargoed at European ports last year due to the sanctions.
At the close of the year, the United Nations said the move by Russia to donate the fertiliser only makes sense since numerous African countries were suffering food shortages and needed the fertiliser. So rather than let it rot at the ports and European warehouses, the UN acknowledged the donation to Africa.
Following the decision to donate the fertiliser rather than let it sit idle in Europe, U.N. spokesman Stephane Dujarric said; “This will serve to alleviate humanitarian needs and prevent catastrophic crop loss in Africa, where it is currently planting season.”
What has not been made public is the monetary value of the fertiliser and how much Russia has opted to forfeit by donating the fertiliser rather than wait to sell to Europe, the originally intended recipient.
It is also not clear whether the consignment is ‘free’ or whether Malawi is to pay for it. What is clear is that owing to the sanctions, world fertilizer prices skyrocketed. According to the U.N., fertilizer prices have soared a shocking 250% compared to pre-pandemic prices.
The already very highly-priced agricultural input following COVID-19 pandemic restrictions is now much more expensive.
The shortage of fertilisers cannot be placed on the sanctions alone, as reports have it, quotas by Moscow on its fertilizer exports are also to blame, as the Kremlin said it needs its fertiliser for its own farmers to increase food production.
“Russia is a top global fertilizer exporter. The disruptions, shortages, and price increase that its quotas have contributed to have made fertilizer unaffordable for some smaller farmers. This could dramatically decrease their harvests, which could potentially lead to food shortages next year,” reported the VOA in its coverage of the re-directed or re-purposed Russian fertiliser cargo.