argiculture farm farming polution carbon sustainability emissions

Gas and fertiliser prices are heavily linked

British farmers have been hit by additional fertiliser costs of £1.45bn since Russian’s invasion of Ukraine, new analysis has showed.

Farmers in the UK spent around £1.42bn on fertiliser in 2022 and £964m in 2023, compared with the £470m spent in 2020, according to research by the Energy & Climate Intelligence Unit (ECIU).

Putin’s invasion of neighbouring Ukraine two years ago sent energy and fertiliser prices soaring as much of Europe’s gas and fertilising components came from the conflict-ridden region.

Fertiliser production is also heavily dependent on gas, so fertiliser prices are closely linked to energy prices.

Prices for ammonium nitrate, the main fertiliser used by British farmers, hit £870 per tonne in September 2022, compared with an average price per tonne of £217 in 2020, according to AHDB data.

Farmers have therefore spent since an estimated £1.45bn more on fertiliser since February 2022 than they would if prices had remained at pre-crisis levels, the ECIU said.

Across the whole of Europe, the sector has been taking to the streets recently to protest a lack of government and industry support in the face of rocketing costs.

Some UK farmers have been forced to shut production as they have been unable to cope with the financial pressures.

The high gas price was also cited as the main reason for the closure of the UK’s largest ammonia plant at Billingham last year, leaving British farmers even more dependent on imports for the main raw material used in chemical fertilisers.

“Farmer protests are in the news, and one of the commonly cited reasons is the price they are having to pay to grow their crops and feed their animals,” said Tom Lancaster, land analyst at ECIU.

“Farmers have been paying a ‘gas price penalty’ on fertiliser, and the bad news is that seems set to continue into 2024”, he warned, as higher energy prices were “likely here to stay” throughout the rest of the decade.

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Although fertiliser prices have come down from the peak of 2022, they have plateaued at 50% above pre-crisis levels since May 2023.

If this higher price is maintained throughout 2024, farmers are projected to spend £755m on fertiliser this year, the ECIU said – £285m or 60% more than they would have spent in 2020.

There are also concerns that the global fertiliser market could suffer a further blow due to the Houthi rebel attacks on Red Sea vessels, which has affected trade of agricultural goods between Asian countries like India and China, and the rest of Europe.

Lancaster said schemes that reduce dependence on chemical fertilisers could help to boost the UK’s food security.

“The government’s new green farming schemes that incentivise soil health should help to reduce the UK’s need for and dependence on foreign fertiliser imports,” he added.

“These schemes also help farmers to invest in hedgerows and trees that protect fields and livestock from extreme weather that is worsening with climate change, again protecting yields and improving productivity.”