UK food producers face soaring fertilizer, feed and CO prices2which is used in packing and slaughtering livestock, as the war in Ukraine disrupts exports from Russia and increases production costs.
Fertilizer prices are climbing towards £1,000 a tonne, from around £650 last week, linked to a spike in the price of gas – key to the production process – and panic buying by farmers fearing the price will n will increase further in the coming weeks. The NFU said nitrogen fertilizer prices have already risen 200% year-on-year.
Farmers said they were likely to offset price increases by buying less fertilizer than usual this season for cereal crops, which could lead to lower production at a time when supplies from of Ukraine is threatened, responsible in times of peace for 12% of the world’s wheat. .
Matt Culley, a wheat and oilseed farmer from Hampshire who heads the National Farmers Union’s crops council, said the new spike in fertilizer prices was adding pressure on farmers already hit by rising crop costs. labour, fuel and animal feed. “We suffered from agricultural inflation,” he said.
Culley said higher fertilizer prices meant greater risk for farmers, as it would mean more investment in the face of other potential threats to the growing season, such as bad weather or lower demand. without a guaranteed crop price.
He said he planned to use 20 per cent less fertiliser, but would plant more land with crops to try and maintain yields and support UK production. Culley said some farmers might try using more organic fertilizers by partnering with cattle ranchers or those who operate anaerobic digesters, which produce energy from organic matter.
With the UK producing around 40% of its own fertiliser, there are fears factories will close as gas prices soar. It would also put pressure on the production of CO2 – released as a by-product of the process – which is currently partly protected by an industry agreement that is due to last until May.
Yara, one of the world’s largest fertilizer producers, which operates in 50 countries including the UK, said it was carrying out daily assessments on how to maintain supply and was too early to say if further closures may occur. the cards.
“Things change from hour to hour,” his boss, Svein Tore Holsether, told the BBC. “We were already in a difficult situation before the war…and now it’s further disruption of supply chains.”
Meanwhile, Russia is the world’s biggest exporter of synthetic fertilisers, supplying more than a fifth of urea, a key fertilizer used in the UK. It has imposed restrictions on exports and supplies are also hampered by ships avoiding Russian ports while insurers will not cover the cargo for fear it will be hit by a trade embargo.
Julia Meehan, fertilizer manager for the commodity prices agency ICIS, said: “Everyone is talking about availability. There are big concerns. »
She said prices had been suspended for exports from the Black Sea region as distributors tried to determine the correct new price – an unprecedented situation which could also have a significant effect on costs for North American importers. Africans and Turks.
“The only benefit is that crop prices are now so high that farmers will be able to sell at a high price and technically they will have the money to pay for the fertilizer,” Meehan said.
The situation is expected to shine the spotlight on a 455 million euro deal by EuroChem, a conglomerate controlled by Russian billionaire Andrei Melnichenko, to buy the nitrogen fertilizer business of Austria’s Borealis, which closed last month and awaits regulatory approval. The deal would extend the reach in Europe of EuroChem, which is a major fertilizer producer in Russia, although headquartered in Switzerland.