Comment on ONS food price inflation statistics
In the first four months of this year fertilisers applied to crops would likely have cost an additional £419 million to buy.
By Tricia Curmi
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Commenting on the most recent food price inflation statistics published today by the Office for National Statistics (ONS) and on newly released ECIU analysis of fertiliser costs, Tom Lancaster, Land Analyst at the Energy and Climate Intelligence Unit (ECIU) said:
“Droughts and floods in Europe and elsewhere have been disrupting supply chains and pushing up prices of food stuffs like olive oil [1]. Last year estimates [2] showed that climate extremes and the gas crisis combined to add hundreds of pounds to the average UK household food bill.
“Farmers are still grappling with near record high fertiliser costs because most of it is made with gas, meaning that fertilisers applied to crops now will be adding to costs for food harvested later in the year. The costs of climate change and our reliance on gas are set to remain with us in our weekly shop for some time to come.”
New analysis from the Energy and Climate Intelligence Unit has found that in the first four months of this year fertilisers applied to crops would likely have cost an additional £419 million to buy, using this year’s prices as compared to those in 2020. Manufacture of many fertilisers requires significant quantities of gas, the price of which has been high.
Significantly, of three of the main fertilisers used by farmers (ammonium nitrate, urea and urea ammonium nitrate), around 90% of the total annual use is likely to have been applied by the end of May, locking in current high production and gas prices for the 2023 harvest.
Notes to editors:
[1] Food price inflation (excluding non-alcoholic beverages) increased by 19.5% in the year to April 2023, only a 0.3% dip on March. https://www.ons.gov.uk/economy/inflationandpriceindices/datasets/consumerpriceinflation/current
Olive oil has increased by 46.4%, driven by drought in Spain where the UK imports much of its olive oil from https://www.thetimes.co.uk/article/olive-oil-prices-hit-record-high-as-spanish-drought-bites-l6fwl7h7r
Extreme April heat in Spain, Portugal, Morocco & Algeria almost impossible without climate change: https://www.worldweatherattribution.org/extreme-april-heat-in-spain-portugal-morocco-algeria-almost-impossible-without-climate-change/
[2] £407 added to 2022 food bill by oil & gas prices and climate change: https://eciu.net/media/press-releases/2022/407-added-to-2022-food-bill-by-oil-gas-prices-and-climate-change-new-research
[3] Fertiliser cost analysis
The analysis updates and refines ECIU calculations made in January and March 2023.
Data sources
British Survey Fertiliser Practice 2020 https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1094276/fertiliseruse-annualreport2020-28jul22.pdf
British Survey Fertiliser Practice 2021 https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1094283/fertiliseruse-annualreport2021-28jul22.pdf
(Tables GB 3.3 in both documents)
Fertiliser Prices AHDB https://ahdb.org.uk/GB-fertiliser-prices
Calculations
Total usage of selected fertilisers in 2020 and 2021 (latest available data) in tonnes:
2020 | 2021 | |
Ammonium nitrate | 1307000 | 1363000 |
Granular urea | 205000 | 213000 |
Liquid Urea Ammonium Nitrate (LUAN) | 469000 | 492000 |
Muriate of Potash (MOP) | 77000 | 73000 |
Triple Superphosphate (TSP) | 68000 | 55000 |
Assuming fertiliser use in 2023 is the same as the corresponding period in 2021, the latest year for which data is available, British Fertiliser Survey data was used to calculate monthly spend using the following sum:
Total annual usage x (monthly percentage usage/100) x monthly fertiliser price
The monthly totals for each fertiliser in 2020 were then subtracted from the 2023 totals to give a total additional spend in 2023 compared to the same period in 2020, prior to the gas price crisis. The cumulative additional spend between January and April 2023 is £419,537,564.
This analysis is based on the assumption that famers buy fertiliser in the month that they use it. In reality, many farmers will have bought forward for 2023 at higher prices in 2022.
2020 monthly price for January-April, alongside percentage of total usage and calculated monthly spend:
Jan | Feb | Mar | Apr | |
Ammonium nitrate monthly usage (% of total) | 0.2 | 2.2 | 26.1 | 40.2 |
Average aAmmonium nitrate price (£) | 228.5 | 224.5 | 227.5 | 229.5 |
Ammonium nitrate monthly spend (£) | 597299 | 6455273 | 77606392.5 | 120582513 |
Granular urea monthly usage (% of total) | 0.1 | 4.3 | 36.2 | 39.6 |
Granular urea price (£) | 246 | 247 | 253 | 251 |
Urea monthly spend (£) | 50430 | 2177305 | 18775130 | 20376180 |
Liquid Urea Ammonium Nitrate (LUAN) monthly usage (% of total) | 0.2 | 3.5 | 31.8 | 43.9 |
LUAN price (£) | 192 | 192 | 192 | 192 |
LUAN monthly spend (£) | 180096 | 3151680 | 28635264 | 39531072 |
Muriate of Potash (MOP) monthly usage (% of total) | 0 | 5.3 | 35 | 27.2 |
MOP price (£) | 257 | 253 | 260 | 269 |
MOP monthly spend (£) | 0 | 1032493 | 7007000 | 5633936 |
Triple Superphosphate (TSP) monthly usage (% of total) | 0 | 4.3 | 31.4 | 22.3 |
TSP price (£) | 260 | 255 | 267 | 280 |
TSPB monthly spend (£) | 0 | 745620 | 5700984 | 4245920 |
Total monthly spend on all fertilisers | 827825 | 13562371 | 137724770.5 | 190369621 |
AN UK price | 234 | 231 | 234 | 236 |
AN imported price | 223 | 218 | 221 | 223 |
(The monthly price for Liquid Urea Ammonium Nitrate is taken from a single reported monthly price in October 2020)
2023 monthly price for January-April, alongside percentage of total 2021 usage (latest data available) and calculated monthly spend:
Jan | Feb | Mar | Apr | |
Ammonium nitrate monthly usage (% of total) | 0.1 | 3.9 | 29.2 | 39.4 |
Average ammonium nitrate price (£) | 691 | 584 | 465 | 435 |
Average ammonium nitrate monthly spend (£) | 941833 | 31043688 | 185068140 | 233604570 |
Granular urea monthly usage (% of total) | 0 | 10 | 39.5 | 34.4 |
Granular urea price (£) | 582 | 521 | 469 | 427 |
Urea monthly spend (£) | 0 | 11097300 | 39459315 | 31287144 |
Liquid Urea Ammonium Nitrate (LUAN) monthly usage (% of total) | 0 | 7.4 | 35.9 | 40.7 |
LUAN price (£) | 605 | 512 | 448 | 427 |
LUAN monthly spend (£) | 0 | 18640896 | 79129344 | 85504188 |
Muriate of Potash (MOP) monthly usage (% of total) | 0 | 7.1 | 42.2 | 19 |
MOP price (£) | 642 | 639 | 631 | 559 |
MOP monthly spend (£) | 0 | 3311937 | 19438586 | 7753330 |
Triple Superphosphate (TSP) monthly usage (% of total) | 0 | 5.5 | 31.2 | 13.6 |
TSP price (£) | 641 | 592 | 575 | 546 |
TSPB monthly spend (£) | 0 | 1790800 | 9867000 | 4084080 |
Total monthly spend for all fertilisers | 941833 | 65884621 | 332962385 | 362233312 |
AN UK price | 700 | 630 | 465 | 439 |
AN imported price | 682 | 538 | 465 | 431 |
Monthly additional spend in 2023 (based on 2021 fertiliser usage rates) compared to the same months in 2020. Also presented cumulatively to April 2023:
Jan | Feb | Mar | Apr | |
Monthly additional spend in 2023 (£) | 114008 | 52322250 | 195237614.5 | 171863691 |
Cumulative additional spend in 2023 (£) | 114008 | 52436258 | 247673872.5 | 419537563.5 |
Calculated by subtracting the 2020 monthly spend from the assumed 2023 monthly spend.
Percentage of total annual fertiliser use in each month in 2021 (latest available data), with total percentage used to May:
Jan | Feb | Mar | Apr | May | Total to May | |
Ammonium nitrate | 0.1 | 3.9 | 29.2 | 39.4 | 17.4 | 90.0 |
Urea | 0.0 | 10.0 | 39.5 | 34.4 | 11.9 | 95.8 |
Liquid urea Ammonium Nitrate (LUAN) | 0.0 | 7.4 | 35.9 | 40.7 | 12.3 | 96.3 |
Triple Superphosphate (TSP) | 0.0 | 5.5 | 31.2 | 13.6 | 2.2 | 52.5 |
Muriate of Potash (MOP) | 0.0 | 7.1 | 42.2 | 19.0 | 5.9 | 74.2 |
AHDB fertiliser price data is not yet available for May.
For more information:
George Smeeton, Head of Communications, ECIU, Tel: 07894 571 153, email: george.smeeton@eciu.net