Two more years of high gas prices could leave British farmers paying £1.1 billion extra for fertilisers

New analysis from the Energy and Climate Intelligence Unit finds Britain’s farmers will have paid an extra £760 million for fertiliser over the course of 2021 and 2022 due to high gas prices. Gas is a key ingredient of many fertilisers and the gas price is predicted to remain high for at least the next two years. If fertiliser prices stay at current levels, this would see farmers’ fertiliser bills since the gas crisis started jump by an additional £1.1 billion by 2024, compared to 2020 prices.

This comes on top of rising energy bills, and a drought that could cut some harvests in half. The price of fertiliser may rise higher still, as the UK's biggest fertiliser production factory, CF Fertilisers, announced in late August that it was temporarily halting production of ammonia due to the price of gas and factories across Europe doing likewise.

Matt Williams, Climate and Land Programme Lead at the Energy and Climate Unit, said: “Farmers are being hit by high fertiliser bills, high energy costs and now a drought. At the base of all of these is gas which is destabilising UK food security and our climate. But innovative British solutions are at hand and with the shift to net zero, new companies are offering up clean fertilisers that can replace those based on gas. Expanding renewables on farms will also help bring down costs and make farmers’ revenues more resilient.”

Pawel Kisielewski, CEO of CCm Technologies, a low-carbon fertiliser company, said: “This latest data from ECIU outlines just how important it is to break the fertiliser link with gas. We need to provide farmers with good value fertiliser options that can deliver the crop yields we need while reducing emissions. One way to do this is to scale up the UK’s supply of domestic, low-carbon fertiliser that can support the industry through the challenges of food security and emissions reduction. The innovation we need already exists, it’s time to bring it to the mainstream”.

Nick Humphries, UK director and chief agronomist of N2 Applied, a low-carbon fertiliser company, said: “The sky-high price of chemical fertiliser this year is a tipping point - it has shown us that this cannot be where the future lies for UK food production. We can no longer be so reliant on chemical fertilisers produced around the world and must instead find sustainable alternatives that farmers have greater control over. Government, industry and food production value chains need to work together to identify how best to make this transition affordable and viable as soon as possible.”

The fertiliser factory that is halting ammonia production also makes liquid CO2 used by the food and drink industry to stun animals and make drinks fizzy. Last autumn the closure of factories making CO2 led to fears of food and drink shortages. The closure of CF Fertilisers in Billingham could mean a repeat of this situation.

The UK imports about 70% of its fertiliser, but supply elsewhere is facing constraints too due. Factories across Europe are cutting production, and plants in Poland and Hungary have shut down production altogether due to gas prices.

ENDS

Notes for Editors

1. Quantities of fertiliser used: 2020 and 2021 figures from British survey of fertiliser practice https://www.gov.uk/government/statistics/british-survey-of-fertiliser-practice-2021; 2022 figures assumed same as 2021.

2. Fertiliser prices 2020-2022 from AHDB GB fertiliser prices https://ahdb.org.uk/GB-fertiliser-prices. Detailed calculations regarding fertiliser quantities and prices available on request. Covers phosphate and nitrogen fertilisers where price data available; excludes potash fertilisers.

3. Earlier ECIU analysis had suggested the 2021-2022 figure might be higher, but the amounts of fertiliser used in 2021 were down 50,000 tonnes on 2020 levels.

4. March 2022 ECIU report on fertiliser prices https://eciu.net/analysis/reports/2022/farming-fertiliser-and-fossil-fuels

5. CCm Technologies, https://www.ccmtechnologies.co.uk/

6. Fertiliser factories across Europe reducing production due to gas prices, https://www.bloomberg.com/news/articles/2022-08-25/yara-to-further-cut-european-ammonia-production-due-to-gas-spike#xj4y7vzkg, https://www.icis.com/explore/resources/news/2022/08/24/10799136/cf-fertilisers-uk-to-temporarily-halt-ammonia-production-at-billingham/?news_id=10798349

7. N2 Applied fertilisers, https://n2applied.com/

8. Drought could cut some harvests by 50%, https://www.theguardian.com/environment/2022/aug/12/mass-crop-failures-expected-in-england-as-farmers-demand-hosepipe-bans