Market evolution: Peat (CN 2703) — 2015–2025

Introduction

This report analyses the evolution of EU external trade in peat (including peat litter, whether or not agglomerated — CN code 2703) over the period 2015–2025. Over this decade, the EU has consolidated its position as a major net exporter of peat, with the trade surplus more than doubling from €208.5 million to €464.2 million. The period has been marked by significant structural shifts: the collapse of imports from Belarus and Russia following geopolitical sanctions, a dramatic reorientation of export flows toward Asian markets — especially China — and a sharp increase in unit prices on both sides of trade. The following sections examine these dynamics in detail.

1. The EU's Surging Export Profile: Volume Growth, Price Escalation, and Market Reorientation

1.1 Export value more than doubled while volumes grew more moderately

Between 2015 and 2025, EU exports of peat increased in value by 110.3%, rising from €229.9 million to €483.6 million. Over the same period, export volumes grew by 30.8%, from 1,915,101 tonnes to 2,504,371 tonnes. This divergence signals a significant increase in average export unit prices, which rose from €120 per tonne to €193 per tonne (+60.8%). The price acceleration was particularly pronounced from 2020 onwards, reflecting both tightening global supply conditions and growing demand from horticultural and energy sectors.

1.2 China became the EU's single largest export destination

The most striking geographic shift in EU peat exports was the rise of China as the dominant non-EU market. Chinese imports of EU peat surged from €19.9 million in 2015 to €119.8 million in 2025, a fivefold increase (+501%). By 2025, China alone absorbed roughly a quarter of all EU peat exports by value, overtaking the United Kingdom, which long held the top position. This growth likely reflects expanding Chinese demand for substrates in horticulture, mushroom cultivation, and soil amendment.

Other fast-growing export markets include:

• Morocco: from €4.9 million to €23.2 million (+375.3%)
• Korea, Republic of: from €7.0 million to €21.7 million (+210.4%)
• Türkiye: from €8.6 million to €17.0 million (+96.8%)
• Japan: from €9.3 million to €14.4 million (+55.6%)

1.3 The United Kingdom declined as a destination despite remaining significant

In contrast, exports to the United Kingdom fell by 40.3%, from €74.9 million to €44.7 million. The UK thus shifted from being the EU's primary export market to a secondary one, a trend likely reinforced by post-Brexit trade frictions and border formalities. Meanwhile, Switzerland remained a stable destination at approximately €15 million throughout the period, showing virtually no change (-0.8%).

2. Collapse of Eastern Supply: Imports Reshaped by Sanctions and Geopolitical Rupture

2.1 Total import volumes fell sharply even as prices surged

EU imports of peat experienced a dramatic contraction over the decade. Import volumes fell by 61.4%, from 297,716 tonnes to just 114,966 tonnes. Import value declined more modestly by 9.7% (from €21.4 million to €19.3 million), because average import unit prices nearly doubled — rising 133.8% from €72 per tonne to €168 per tonne. This suggests that the EU increasingly relied on higher-priced suppliers as traditional low-cost Eastern European sources were severed.

2.2 Belarus and Russia effectively disappeared from EU import markets

The most consequential change in the import structure was the near-total collapse of supplies from Belarus and Russia:

Together, these two countries accounted for roughly two-thirds of EU peat imports by value at the start of the period. Their disappearance reflects the impact of EU sanctions packages — Belarus sanctions from 2021 and Russia sanctions following the 2022 invasion of Ukraine. A price shock of 135.4% was detected in 2023 for Russian imports, with an abnormality score of 172.6, indicating an extreme disruption event.

2.3 Replacement suppliers emerged but could not fully offset the loss

Several alternative import partners partially compensated for the Eastern European shortfall:

• Canada: from €0.3 million to €4.0 million (+1,117.3%)
• Ukraine: from €1.0 million to €4.8 million (+363.5%)
• United Kingdom: from €3.8 million to €7.0 million (+84.3%)
• Bosnia and Herzegovina: from €1.0 million to €1.1 million (+11.6%)

However, the combined contribution of these suppliers did not fully replace the lost volumes. Ukraine's growth is notable given the ongoing conflict, though supply from Ukraine showed high volatility (coefficient of variation of 0.81), and India's imports collapsed by 89.5% from €0.4 million to just €0.05 million.

3. Baltic Dominance and EU Export Specialisation: A Regional Production Hub Emerges

3.1 Latvia and Estonia became the EU's peat export powerhouses

Within the EU, peat export capacity was heavily concentrated in the Baltic states and neighbouring countries. By 2025, the top three exporting Member States were:

Latvia and Estonia together accounted for approximately 57% of all EU peat exports by value in 2025. Their combined growth reflects both the natural availability of extensive peat bogs in the region and successful industrial development of extraction and processing infrastructure. Finland also emerged as a fast-growing exporter (+353.7%, from €3.1 million to €14.1 million), while Lithuania contributed €43.3 million in 2025 (+140.6%).

3.2 Ireland and Germany's export positions eroded

In contrast, Ireland's peat exports fell by 50.5%, from €62.3 million to €30.8 million, and Germany's declined by 38.3%, from €35.2 million to €21.7 million. Ireland's decline is consistent with its announced phase-out of peat harvesting for climate and biodiversity reasons, which has constrained domestic production capacity. Germany's decline may reflect a combination of domestic regulatory pressures and increased competition from Baltic producers.

3.3 Export concentration decreased, signalling diversification of destinations

The Herfindahl-Hirschman Index (HHI) for EU peat exports by value fell from 1,364 to 867 between 2015 and 2025, a decline of 36.4%. This indicates that export destinations became significantly less concentrated over the decade. While the UK alone once dominated the market, the 2025 landscape features multiple large-scale buyers — China, the UK, Morocco, Korea, Switzerland, and Türkiye — spreading risk and reducing dependency on any single partner.

On the import side, the HHI fell more moderately from 2,662 to 2,445 (-8.2%). The higher baseline reflected the dominance of Belarus and Russia; their removal paradoxically did not increase concentration because multiple smaller suppliers filled the gap.

3.4 Baltic states showed the highest specialisation in peat

According to specialisation indices for 2025, the most specialised EU peat exporters were:

Latvia and Estonia displayed exceptionally high RCA values, confirming peat as a flagship export product. By contrast, large economies such as Italy (RCA 0.03) and Portugal (RCA 0.003) showed essentially no specialisation in this product, consistent with limited domestic peat resources.

Conclusion

Over the 2015–2025 period, the EU peat trade underwent a structural transformation. The EU reinforced its role as a major global supplier, with export values more than doubling to €483.6 million. This growth was driven by a combination of moderate volume increases and a substantial 60.8% rise in export unit prices. Geographically, the most significant development was the reorientation of exports toward Asian markets — particularly China, which grew fivefold to become the largest single destination — while the UK's share declined. On the import side, the collapse of Belarusian and Russian supplies following EU sanctions reduced import volumes by over 60%, creating supply challenges that were only partially offset by increased sourcing from Canada, Ukraine, and the UK. Within the EU, Latvia and Estonia consolidated their positions as the dominant production and export hubs, while Ireland's declining role reflected broader policy shifts toward peat harvesting phase-outs. Looking ahead, regulatory pressures on peat extraction — driven by climate and biodiversity commitments — may constrain supply growth even as global demand continues to rise, potentially sustaining upward pressure on prices.