The EU's Carbon Border Adjustment Mechanism (CBAM) could cost farmers €39 billion over a seven-year period, according to Copa Cogeca.

The umbrella organisation representing EU farmers and agri-cooperatives said this is equivalent to 10% of the current Common Agricultural Policy (CAP) budget over the same period.

CBAM, which came into force on January 1, is essentially a tax on imports of carbon-intensive products into the EU, including fertiliser.

The measure requires importers of fertiliser to pay for certificates to import products.

The war in the Middle East, along with the closure of the Strait of Hormuz, has brought renewed focus on the CBAM and how it may deepen any fertiliser crisis.

Copa Cogeca

Copa and Cogeca said CBAM was originally designed to support industries covered by the EU Emissions Trading System (ETS), which prices carbon dixoide (CO₂) emissions.

"While this instrument drives decarbonisation, it also increases production costs within the EU and can reduce competitiveness compared to international producers.

"CBAM was therefore created to ensure that imported goods face a comparable carbon price at the EU border, preventing carbon leakage.

"In principle, such a mechanism is understandable. However, the inclusion of fertilisers fundamentally changes the equation for farmers," the organisation said.

The European Commission’s approach foresees a steady and progressive increase of CBAM up to 2034.

Around 30% of nitrogen (N) fertilisers used in the EU are imported.

Fertiliser

Copa Cogeca has published its initial estimate on the cost of the measure for European farmers.

The analysis states that in 2026 alone, prices are expected to increase by around 15% on average.

"Over the next seven years, this would amount to approximately €12 billion," the group said.

If one considers the price alignment that EU-based fertiliser producers could operate, Copa and Cogeca estimate that the overall cost for farmers could reach up to €39 billion over seven years.

"The Iran crisis also acts as a revealing stress test of a structural scissors effect facing European farmers: fertilisers costs are increasingly exposed to additional policy-driven charges, while agricultural output prices remain set on global markets.

"This structural imbalance is dangerous for both food security in the EU and the long-term sustainability of European agriculture.

"This is why the European farming community opposes CBAM in its current form, and why this issue should raise concern far beyond the agricultural sector," the organisation added.

Ahead of the publication of the EU fertiliser plan on May 19, Copa Cogeca has called for the suspension of CBAM and long-term measures to offset CBAM-related costs for farmers.

The group also demanded "full clarity" on how the CBAM revenues will be redistributed within the EU.