The Irish Co-operative Organisation Society (ICOS) said today that the European Commission’s Fertiliser Action Plan must deliver immediate relief and longer-term strategic solutions for farmers and the agri-food sector, as the escalating Middle East crisis threatens not only global energy markets but also food security.

The inordinate burden that will exist for Ireland, as the EU’s CBAM carbon tax is levied on imported fertiliser from outside the EU, will cause fertiliser prices to ‘skyrocket’, the co-op body said.

The Middle East is a critical player in the global fertiliser trade, accounting for approximately 30% of exports of major fertiliser products. With supply routes severely disrupted, and excessive input cost inflation already weighing heavily on agriculture since 2022, the situation is now becoming increasingly serious.

Ireland is particularly exposed. As a relatively small fertiliser market, importing approximately 1.7 million tonnes in 2025 and with no domestic fertiliser production beyond lime, the country is entirely dependent on international supply chains.

While strong output prices in sectors such as dairy and tillage helped cushion the impact of soaring input costs in 2022, that is no longer the case. With current milk prices at approximately 37 cent per litre and continued downward pressure on output values, farmers and the wider supply chain simply cannot absorb further cost shocks.

The International Fertilizer Association has already warned that prolonged disruption to energy and fertiliser trade routes will hit import-dependent countries hardest.

ICOS said every effort is being made by co-operatives and suppliers to secure adequate fertiliser supplies for the remainder of this year, aided in part by significant advance purchasing ahead of the introduction of the Carbon Border Adjustment Mechanism (CBAM). However the outlook for 2027 is highly uncertain, with the potential for a deep crisis ahead.

Every day that the Strait of Hormuz remains disrupted increases the risks facing farmers, co-operatives and the wider food production sector. Unless preparations are made now by both the European Commission and the Irish Government, the impact of this crisis could intensify significantly next year.

ICOS said the most immediate practical step the European Commission could take would be to suspend CBAM for fertiliser imports.

As the EU remains a net importer of fertiliser, any action plan that fails to address the impact of CBAM will fall short. The cost implications are already severe, with the CBAM levy on non-EU CAN fertiliser estimated at approximately €115 per tonne in 2026.

Analysis by Copa-Cogeca estimates CBAM will cost EU farmers more than €800 million this year alone, rising to €12 billion over the next seven years. Given that European fertiliser prices have risen in tandem with the levy, the true cumulative cost could exceed €39 billion by 2034. This is equivalent to approximately 10% of the current CAP budget.

ICOS noted that while EU agriculture ministers have already agreed to reduce Most Favoured Nation duties on imported fertiliser, in an attempt to offset some of the impact, this is widely regarded as insufficient. The European Commission has also proposed provisions under Article 27a of the CBAM regulation to allow temporary suspension of the measure. ICOS has called on Irish MEPs to support the rapid approval and enactment of this mechanism.

In parallel, ICOS is calling on the Irish Government to urgently engage with all stakeholders in the fertiliser supply chain ahead of the 2026/27 season.

Securing adequate fertiliser supplies for next year will require significant financial commitments at a time of extreme market uncertainty, with co-operatives and supply chain operators potentially exposed to major financial risks in locking in product at elevated prices.

There is a clear role for both the European Commission and the Irish Government in helping to de-risk this exposure in the national interest and in support of Ireland’s food producers.

ICOS is calling on the Government to introduce a €40 million state aid package, making use of temporary EU flexibility, to incentivise fertiliser procurement during the third and fourth quarters of 2026 to ensure adequate supply for 2027.

ICOS also warned that the pressures extend far beyond fertiliser alone. Across the agri-food chain, co-operatives are facing major increases in energy, fuel and operational costs, affecting services from artificial insemination and milk recording through to core on-farm supports. Without intervention, the cumulative burden on Ireland’s food production system will become unsustainable.

Irish Co-operative Orqanisation Society (ICOS)

ICOS represents co-operatives across Ireland, including dairy processing co-operatives and livestock marts. These organisations collectively generate approximately €16 billion in turnover, with 175,000 members and employment for 12,000 individuals in Ireland, plus an additional 24,000 overseas. In total, Ireland has around 1,000 co-ops, with the largest 100 employing roughly 40,000 people.