British farmers could face extra £760m fertiliser bill from Russia, Ukraine, gas crises

Assuming prices stay as high as they currently are this could add in the order of £760m to farmers’ bills over the next twelve months, assuming similar quantities of fertiliser as 2020 (and other recent years) are used. The analysis also shows that farmers may have already been hit by an additional bill of up to £160 million for fertiliser in 2021 due to the volatile price of gas which is used in the manufacturing process.

Many key chemical and mineral fertilisers are made using significant amounts of energy and with methane (derived from pipeline gas) as a raw ingredient. In autumn 2021 these soaring prices led to some fertiliser factories having to close. In 2020, the UK imported more than 22,000 tonnes of fertiliser from Russia, one of the world’s largest producers.

Both fertiliser and fuel prices are rising once again due to the Russian invasion of Ukraine. Red diesel was at 76.9 pence per litre in late February (even before the conflict intensified), compared to 52.6 pence per litre the same time last year.

Commodities brokers have recently reported Ammonium Nitrate at £925 per tonne and Phosphates at £755 per tonne. This puts Ammonium Nitrate at more than four times the price it was in 2020. This followed comments by the Russian Ministry of Industry and Trade asking producers to stop exporting fertilisers [2]. At these prices, some UK farmers are beginning to report that they will buy or use less fertiliser than normal to make savings.

But a handful of British companies are leading the way in developing net zero fertilisers, and glasshouses that are heated by heat pumps run on renewable electricity, instead of gas. This can help to start cutting Britain's dependence on Russian gas and fertiliser.

Matt Williams, Climate and Land Programme Lead at the Energy and Climate Intelligence Unit, said: "On top of Russian sabre rattling around fertiliser supplies, farmers find themselves on the end of a fossil fuel double whammy, with higher costs of both fertiliser and energy due to the oil and gas crises. This is compounded by recent extreme weather hurting potato, wheat and orchard harvests in the UK.

“We need to think about fertiliser and food security. Clean, net zero, homegrown solutions exist, but those British agritech companies leading the way must be given a boost if we’re going to insulate both British farmers and the British shopping basket as best we can from oil and gas price spikes and the aggression of rogue leaders like Putin.”

Fay Jones MP, and Chair of the All Party Parliamentary Group on Farming, said: “The tragic situation in Ukraine is pushing fertiliser prices beyond the record highs already seen in 2021 due to gas prices. For many farmers this is making a bad situation even worse, hitting them in the pocket, while these fertilisers made from fossil fuels continue to drive climate change. Many framers have been working to find ways to reduce their carbon foot print; but they need more help decarbonising, cutting their use of fossil fuels, and reducing use of fertilisers where possible. Innovative British companies can help to pave a new path by developing and marketing low-carbon fertilisers, creating jobs here in the UK.”

Kåre-Gunner Fløystad from N2 [3], said: "Our solution can help farmers produce their own green nitrogen fertiliser locally with resources already on the farm. It provides green ammonia, but more importantly for the environment is the possibility to stop methane and ammonia emissions from manure management. This can have a significant impact on the environmental footprint of food production. "

Pawel Kisielewski, CEO of CCm Technologies [4], said: "Emissions from end-to-end food production is approaching 24% of total global greenhouse gases, with the manufacture of conventional fossil fuel based fertilisers being a very significant part. There is a growing market for alternative fertilisers such as ours, that use waste products and captured carbon dioxide to deliver solid crop yields while using at least 20% less applied nitrogen and phosphate. In real terms, the deployment of 50 of our standard production units could result in emissions savings equivalent to removing around 375,000 cars from the road each year”.

Ben-Scott Robinson, Co-founder and CEO of Small Robot Company [5], said: "Robotics and Artificial Intelligence could be key to unlocking agriculture as one of the biggest contributors to Net Zero, reducing CO2 emissions globally. Up to 90% of fertiliser is wasted, plus billions of tonnes of soil eroded each year. With robotics, we could cycle tens of millions of tonnes of carbon a year in the UK alone: up to 9 tonnes per hectare. And with robotic precision application technology, we could radically cut fertiliser use. So it's both economically and environmentally sustainable. The best of both worlds."