The Three Fs: Why UK Farmers Fear Soaring Fertilizer, Feed and Fuel Prices | Supply chain crisis

A large fiberglass tank is locked away on Matt Culley’s arable farm in Hampshire. No wonder: the fertilizer contained inside has become an increasingly valuable commodity.

The cost of synthetic fertilizers, needed to grow many crops and grass, started to escalate last fall when the price of the gas needed to produce it began to skyrocket. The conflict in Ukraine has only exacerbated the situation.

If Culley bought enough fertilizer to just fill this 25,000 liter vessel at current prices, it would cost him £21,000. Just a year ago, the same amount of liquid urea ammonium nitrate would have cost him £6,000, an increase of 350%.

“We’re not the most fertile ground here,” said Culley, shaken by a spring downpour as he surveyed a field of milling wheat, which will be milled into flour to use in cookies.

Matt Culley would pay £21,000 to fill this tank with fertilizer. A year ago it would have cost £6,000. Photograph: Martin Godwin/The Guardian

Planted at the end of October, the green shoots of wheat have already reached a height of about 15 cm (six inches) centimeters, and everything is fine, the crop will be ready for harvesting in mid-August.

“We are conventional farmers, so we rely on inputs, whether synthetic or organic like manure, to feed the crop to the point where we can justify doing the work.”

UK farmers use around 1 million tonnes of manufactured nitrogen each year to grow crops for human consumption and grass for animals to eat, according to Anthony Hopkins, chief crop adviser at the National Farmers’ Union. (NFU).

Yet farmers are facing unprecedented costs for this vital ingredient. Ammonium nitrate fertilizer prices have risen to as much as £1,000 a tonne in recent weeks, from £280 a tonne 12 months ago.

Culley and his brother Daniel are the fourth generation to farm these 170 hectares (420 acres) of land near the town of Andover – growing wheat, barley, rapeseed and berries – while he also manages 480 additional hectares for other local farmers and landowners.

Some, but not all, of the fertilizer needed for this year’s crop had been purchased by Culley last fall when the price began to rise, and so he decided to delay future purchases; a decision he now regrets. Multi-year contracts for some of his crops mean that he commits to delivering a set amount of product at harvest time.

As a result, he and the farmers he represents as chairman of the NFU Crops Council are compensating for increased costs by settling for less.

“This year we are reducing enforcement by 25% on all crops in our buying group. It avoids ordering an extra filler,” Culley said. “We need to apply enough to grow the crops, but we will have to lower our yield expectations.”

Fertilizer is just one of the three Fs farmers have to buy – along with feed and fuel – the prices of which have all skyrocketed in recent months, especially since Russia invaded Ukraine, adding to the pressure on agriculture.

Culley has seen a 60% increase in animal feed over the past two years, while energy and lubricants are more than a third (38%) higher, and fungicides and herbicides are up around 10%.

Soaring costs are just the latest challenge for domestic food producers, following months of labor shortages, which were highlighted in a parliamentary report last week.

Environment, Food and Rural Affairs Committee MPs have warned that chronic labor shortages could affect domestic production, driving food prices even higher and more food imports .

Persistent and significant labor shortages have led to the rotting of unharvested crops in the fields, caused the slaughter of healthy pigs on farms due to the lack of workers in meat processing plants and disrupted the chain food supply, threatening UK food security.

The UK produces enough food to cover around 60% of its needs, but many in agriculture fear a continued lack of workers after Covid and Brexit – while seasonal work permits for people coming to the UK for picking crops and flowers are limited to 30,000 a year by the government – combined with soaring costs are putting such pressure on farmers that some may choose to leave the industry.

NFU President Minette Batters is calling on the government to help farmers alleviate some of the unprecedented costs and cut fertilizer supplies.

She welcomed the meeting on the fertilizer crisis organized by the Department for Environment, Food and Rural Affairs (Defra) with agricultural industry bodies, including the NFU, in late March.

Ministers have delayed the introduction of a ban on the use of urea, a key fertilizer used in the UK, to reduce air pollution – and are also changing some rules around the spreading of autumn manure .

“We continue to engage with the government on the importance of fertilizers and how they can provide stability and confidence in the food supply chain,” Batters said.

However, some of the government’s other measures are longer term and are unlikely to have an immediate impact. Defra has offered to pay farmers to reduce the cost of sowing nitrogen-fixing crops, such as legumes and clovers, which do not require fertilizer. But that’s not much help when crops like Culley’s winter wheat are already in the ground.

Commodity analysts warn farmers won’t see fertilizer prices drop any time soon.

Consulting group CRU, which tracks commodity prices, saw its fertilizer price index – which includes data for nitrogen, potash and phosphate – hit a record high on March 31, after the start of the war in Ukraine.

“At this time, we expect prices to continue to rise over the next couple of months,” said Chris Lawson, CRU’s fertilizer manager. “There is incredible volatility in the market right now.”

Several factors will keep prices high for longer, including high gasoline prices and reduced supply. Last month, CRU estimated that energy costs were affecting almost a third (28%) of European fertilizer capacity as factories cut production or were temporarily suspended.

The UK produces around 40% of its own fertiliser, but there are also concerns about deliveries from Russia – the world’s largest exporter of synthetic fertilisers, which supplies more than a fifth of the urea – which restricted some exports.

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Back on the farm in Hampshire, Culley will continue to monitor his fields over the next few weeks, determining how often to apply small amounts of fertilizer, to ensure his crops are growing as they should.

“The risk is much higher at these prices,” he said. “The question next fall will be: do we plant this crop? »

A Lancashire farmer spoke on behalf of many in his industry when he recently won £30,000 in the popular postcode lottery. Rather than buy a new car or a vacation, he announced that he would spend all his windfall on fertilizer.

About Natalee Broderick

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