Farmers rattled by rising cost of fertiliser

Russia’s grip on the fertiliser market is being felt by British farmers who face sharply rising prices that are expected to have a big effect on the supply chain and push up the cost of groceries.

Farmers are paying close to £1,000 a tonne for ammonium nitrate fertiliser, compared with £647 in January and £245 in January last year, according to the Agriculture and Horticulture Development Board. The cost of urea, phosphate and potash fertiliser has more than doubled.

James Cox, an arable farmer in Gloucestershire, said that fertiliser used to be 55 per cent of the cost of his business, but will now be near to 80 per cent. “If I used to pay around £36,000 for my fertiliser and am now facing a £120,000 bill, where am I going to get that money from? None of us knows what the price will be for next year and we are all having to take decisions about laying it now.”

The UK produces about 40 per cent of its own fertiliser. Russia is the world’s largest export of fertiliser.

EuroChem, which is controlled by Andrey Melnichenko, Russia’s seventh-wealthiest person, has been affected by sanctions. Industry experts have said the European Commission could now use merger control powers to block EuroChem’s proposed takeover of nitrogen fertiliser producer Borealis, which could increase Russia’s position further.

Melnichenko was yesterday among Russian business chiefs sanctioned by the EU along with Andrei Guryev, chief executive of PhosAgro, Europe’s largest producer of phosphate-based fertilisers, and Dmitry Mazepin, the majority shareholder of rival fertiliser company Uralchem.

Prices are expected to rise further as a result of sanctions.

Norway’s Yara, one of the world’s largest fertiliser makers, said yesterday that it would curtail ammonia and urea output in Italy and France due to the rise in natural gas prices.

Svein Tore Holsether, chief executive, warned this week: “It’s not whether we are moving into a global food crisis, it’s how large the crisis will be.”