Tariffs are All the Rage

On the 21st of November, EU Trade Ministers met to mull additional tariffs for agricultural and fertilizers from Russia and Belarus into the EU.  This certainly has raised some questions over practical implementation and whether the current sanctions are serving their intended purposes.

The U.S. Department of Commerce has set countervailing duty (CVD) rates on phosphate fertilizers from Morocco (16.81%) and Russia (17.20%) to assist U.S. phosphate producers.  For ammonium sulphate from China, rates are even more penal:  antidumping duty (AD) of 493.46% and countervailing duty (CVD) rate of 206.72% (federalregister.gov).

In 2018, China cut the NPK export tax from 20% to 100 Yuan/metric ton and then in 2019, they waived the export tax all-together on many fertilizers including NPKs.  NPK exports predictably soared (over 700% in 2018).

Export Taxes - Effective?

The reduction in 2018 and subsequent removal in 2019 of the China Export Tax on selected fertilizers had significant effects on exports.

Tariffs are a very complex issue. One can trace each step of the fertilizer supply chain from the mine, processing, importation, re-processing, packaging, shipping, distribution, retailing and finally to the end farmer applying in the field.

People working at every stage in the supply chain will have differing opinions. But honestly, I haven’t met too many farmers wanting to pay more for higher farm input prices.  There is certainly ardent debate on both sides of the tariff issue.  In general, they are protectionist measures in one way or another.

The Thai agricultural fertilizer market has no import tariffs on most chemical fertilizers, which makes for an interesting case study. Are tariffs achieving their goals of protecting domestic producers and ensuring market fairness, or are they creating unintended consequences across global supply chains?" 

Maybe that should be 'All the Rage' !