Since Pancevo-based Azotara was put on the “bankruptcy drum” at the end of last year, and before that the company Fertil from Backa Palanka stopped working, in Serbia, which has over five million hectares of agricultural land, only one producer of mineral fertilizer, Elixir Group, remained. This company also has the largest share in the total turnover on the domestic market, it is the largest exporter, and until recently it was also the largest importer.
The statement that with the collapse of large socially-owned companies, certain industries in Serbia were won over by foreign companies or that certain activities fell to only one producer has not been news for a long time, but one fact is certainly true. In a country with over five million hectares of agricultural land, of which more than four million is arable, there is currently only one producer of mineral fertilizers. It is the company Elixir Group, with production facilities Elixir Zorka in Sabac and Elixir Prahovo in Prahovo.
Formerly the largest producer of mineral fertilizers in the Balkans, HIP Azotara from Pancevo, entered bankruptcy proceedings in September 2018. At that time, production was stopped, and at the beginning of January 2019, the company declared bankruptcy. At the end of last year, the Agency for Licensing of Bankruptcy Trustees announced the sale of Azotara through a public tender at a starting price of around 49.1 million euros.
Azotara employed almost a thousand people at the time it declared bankruptcy. This company, founded in 1962, managed to survive the NATO bombing, but not the bad privatization in 2006, as well as the subsequent rescue interventions of the state. The company, which produced 21 tons of mineral fertilizers before entering the disputed privatization, was reduced to being mentioned in the media, almost to the end, only as a victim of political scandals, corruption and state crime.
Extinguishing another Balkan star
The infamous end, with only slightly less political drama, befell another company that produced artificial fertilizer, this time in private ownership. In the same year when Azotara was privatized, the Victoria Group company opened the Fertil mineral fertilizer factory in Backa Palanka, with a capacity to produce 230,000 tons of fertilizers per year.
It was then announced that we have a new champion in this area in the Balkans, ie that it will be the first factory in the region to produce fertilizer by compaction, the most modern and environmentally friendly technology according to German recipes that will turn standard mineral components into homogeneous granules.
Our second Balkan star in fertilizer production lasted significantly shorter than Azotara – one decade. Along with the growth of problems in the parent company Victoria Group, which was also accompanied by numerous political scandals, Fertil reduced production, only to stop it completely in 2016 and continue to sell only stocks. The company was officially deleted from the register of the Business Registers Agency (APR) in November 2019. At that time, the former owner of Fertil, Victoria Group, had a new owner for more than a year – MK Group.
The current only producer of mineral fertilizers in Serbia, Elixir Group, started as a family company founded in 1998 by Stanko Popovic, one of the former co-owners of Victoria Group. In 2011, Elixir bought the company Zorka Mineral Fertilizers in Sabac, and a year later IHP Prahovo near the village of Prahovo. Elixir Group consists of five companies, produces an average of 600 thousand tons of complex mineral fertilizers per year, with ambitions, as it says on the company’s website, to grow from a local to a regional leader and become globally recognizable in the mineral fertilizer market.
Market of eight companies
Until these ambitions are realized, Elixir Group is not only the only producer, but also the multipractitioner of the domestic market of mineral fertilizers: it has the largest share in the total market turnover, is the largest exporter, and this company was until recently the largest importer.
This is shown by the latest analysis of the Commission for Protection of Competition on the situation in this economic sector, concluding with official data until the end of 2019. The sector analysis included eight market participants, producers and importers, which together make up about 90% of the total fertilizer market in 2019.
It amounted to 806 thousand tons, and the largest volume turnover in 2019 was achieved by the company Elixir Group, whose market share is estimated at 30%. Promist, Phosagroi Eurochem also have higher shares, while individual shares of other importers did not exceed 6%.
The nitrogen fertilizer market in 2019 is estimated at about 390 thousand tons, of which about 60% is urea, which is exclusively imported. The most significant participants in the urea market are the importers Phosagro, Eurochem and Agroglobe, and the observed eight participants participated with 84% in the total estimated turnover of urea on the Serbian market in 2019.
The market for complex fertilizers is estimated at about 400 thousand tons, with about 75% of complex (NPK) fertilizers. The most significant participants in the complex fertilizer market are Elixir Group and Promist, while the remaining importers together make up about 25% of the market.
Brotherhood with the Russians is the most expensive
The total production of fertilizers in our country in 2019 was 14% higher than the production in 2017, but because of that, imports increased by as much as 62% in just one year. At the same time, the import of nitrogen fertilizers almost doubled, and the import of urea as the most important type of nitrogen fertilizer increased 2.8 times, while the value of its import increased by 204%. This is, among other things, a consequence of the bankruptcy of the company HIP Azotara from Pancevo, once the largest producer of urea in Serbia, the report states.
The import of artificial fertilizers is free and is not burdened with customs duties. Most fertilizers were imported from Russia (60%), and far smaller quantities from the European Union, mainly from Croatia, Austria, Hungary and Romania. The average import price increased by 13% over three years, and the most expensive fertilizer is from Russia, which is increased by 20%. Of the five countries mentioned, only imports from Austria fell in price in the three-year period by 11%.
According to the data of the Customs Administration, in 2017 and 2018, the leading importer of fertilizers was the company Elixir Group, which in 2019 was replaced by Promist.
We import from the Russians, we export to the Ukrainians
Exports, on the other hand, increased by 29% in a three-year period, while the coverage of imports by exports increased from 50% in 2017 to 65% in 2019. The average export price increased from 257 to 299 euros per ton, an increase of 16%.
In the export of mineral fertilizers, complex and then nitrogen fertilizers are the most represented, while the share of other types of fertilizers is negligible. This change in the structure of exports in favor of complex fertilizers is a reflection of the change in the structure of fertilizer production, and can be attributed to the suspension of nitrogen fertilizer production in the HIP Azotara factory in 2018, the report states. Due to the cessation of production of nitrogen fertilizers in this factory, the largest exporter of fertilizers in 2019 was the company Elixir Group, whose production structure is dominated by complex fertilizers.
Mineral fertilizers are mostly exported to Hungary, and Romania, Croatia, Bulgaria and Bosnia and Herzegovina stand out from other countries in the region. In 2019, significant quantities of fertilizers were exported to Ukraine, so that this country became the second largest destination for fertilizers originating from Serbia. In the observed three-year period, exports to these six countries accounted for about 80% of total exports of mineral fertilizers.
Compared to the beginning of the observed period, exports to Romania and Ukraine increased the most, over 2.5 times, while exports to Hungary decreased by 21%.
In 2017 and 2018, the highest average export price of fertilizers was achieved on the market of Ukraine, to which almost exclusively more expensive, complex fertilizers were exported, and in 2019 on the Croatian market.
The share of the largest exporter, the company Elixir Group, increased over three years in volume from 60% to 80%, and in value from 70% to 90% in total fertilizer exports. Of the other exporters, the fertilizer traders Borealis and Promist stand out, and these three participants together export about 90% of the total quantities of fertilizers from Serbia, BiF reports.
