Farming cost crisis as fertiliser prices soar

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A huge surge in fertiliser prices has made business planning and nutrient management a financial nightmare for Scottish farmers and growers.

Nitrogen fertiliser has rapidly increased in price, from just over £200/t in spring to around £700/t by the end of autumn.

Phosphate and potash prices have also increased by over 70 per cent over the same period.

Grain prices have also been rising, but not to the same extent, leaving farmers questioning how fertiliser and other input cost increases can be managed and absorbed.

To address the issue, NFU Scotland has pointed members towards online planning tools as the union encourages industry bodies like AHDB and Scotland’s Farm Advisory Service to help support the industry.

With reduced European fertiliser production and increased global demand, there are predictions of a lasting shortfall across Europe.

For the fertiliser price to fall, energy costs must reduce, fertiliser-producing countries’ trade policies must alter and there has to be a shift in global crop demand.

At this early stage it is predicted that the impacts of a shortage will be most acute in early spring 2022.

NFU Scotland vice president Andrew Connon said: ‘Fertiliser must be viewed by politicians as a vital component in ensuring food supplies rather than simply a by-product of carbon dioxide production.

‘The cost implications of recent fertiliser price increases will affect almost every farming business.

‘For those growing combinable crops, potatoes, fruit and veg, decisions will be made as to whether to maintain previous acreages.

The livestock sector is also seriously affected by the rise. Across all sectors a substantial rise in working capital is needed and restricted credit terms from suppliers will create pressures on cash flow.

‘It is difficult to predict when prices will fall again, with Covid-19 still causing jitters in the market, Brexit uncertainty ongoing and global demand for fertiliser higher than ever.

‘With the UK a small player in the global fertiliser market, we are exposed to these severe price hikes. It is equally difficult to predict whether current grain price rises will be able to cover these higher fertiliser costs as this depends on harvests around the world.

‘However, one thing which is certain is the need to get the most out of nitrogen fertiliser, slurries and manures. Adopting technologies that monitor crops and soils in real-time could identify smarter ways of applying nitrogen to crops.

‘Getting fertiliser on to crops and grass in the right way, in the right conditions and at the optimum time could increase fertiliser utilisation, potentially maintaining or producing higher yields from lower applications at a field scale.  This improvement in efficiency also benefits the environment, as nitrous oxide from fertiliser is the arable sector’s biggest source of emissions.

‘We will continue to engage with stakeholders and use communications channels to signpost key information as we approach a very challenging spring.’