High fertiliser prices add £78m per month to farmers bills, says ECIU
High fertiliser costs are adding £78m to farmers’ monthly bills amid fresh food shortages, according to new analysis from a leading Westminster advisory group.
The Energy and Climate Intelligence Unit (ECIU) has found that the cost of fertiliser, pushed up during the gas crisis, means farmers could spend nearly a billion pounds this year on ammonium nitrate, urea and liquid urea – essential chemicals for agriculture.
It has calculated that British farmers could spend as much as £938m extra on fertilisers due to the increased cost of these products, equivalent to £78m per month.
Fertilisers prices have spiked following Russia’s invasion of Ukraine last year, with the chemical linked to high gas prices as many fertilisers are made using gas as an ingredient or in the manufacturing process.
While gas prices have fallen in the last few months they are still three times higher than before the crisis.
For example, UK-produced ammonium nitrate was £234 per tonne in January 2020, reached a high of £841 per tonne in July 2022, and was still at £700 per tonne in January 2023.
Meanwhile, many analysts expect wholesale gas costs to remain higher than pre-crisis levels for several years, with potential for further volatility.
Last year, academics conducted analysis for ECIU which found that 88 per cent of food price inflation in 2022 was down to high oil and gas prices and the impact of climate change, equivalent to adding £407 to the average household’s food bill .
Matt Williams, land use analyst for the ECIU, argued farmers were getting hit from all sides, and that “underlying many of their troubles are oil and gas.”
He explained: “A high gas price made heating greenhouses unaffordable, it’s made fertiliser expensive and burning these fossil fuels has driven up extreme weather like the droughts that are still ongoing in parts of the country.”
In his view, the current crisis in the agricultural sector was a fresh argument for further renewable investment.
Williams said: “Investing in electric heat pumps for greenhouses, solar and wind on farms and British-made low-carbon fertilisers are, in hindsight, steps that might have helped us through the current storm. These measures plus building farms’ resilience through planting trees to shade livestock and trap moisture in soils would help boost the UK’s long-term food security.”