Farmers face a doubling of fertilizer prices when a net-zero border tax is introduced in January, research suggests. [some emphasis, links added]
Labour wants to introduce a green levy on imports to mirror measures by the European Union introduced earlier this year.
Farmers have warned that the move will have a devastating impact on the industry, as they face the worst harvest on record due to the summer drought.
The National Farmers’ Union (NFU) is also warning the changes could push up food prices and wants the Government to delay their introduction.
Fertilizer prices have risen by as much as 45 percent since the war in Iran disrupted shipping in the Strait of Hormuz.
Ministers plan to introduce a carbon border adjustment mechanism (CBAM) from Jan 1, 2027, which will impose a tariff on certain imported goods, including fertilizer.
Academic research published in the Journal of Agricultural Economics found that similar measures could double fertilizer prices and reduce farmers’ incomes by up to 8 percent.
“Higher prices are projected to reduce demand, leading to a 21.4 percent decline in domestic production and a 37 percent reduction in imports,” it warned.
“The results indicate that the combined effect of phasing out free allowances and implementing CBAM will double mineral fertilizer prices.”
The findings have raised concerns for British farmers, who rely heavily on nitrogen-based fertilizers, though the Government has said it expects the initial impact of the UK scheme to be modest.
When the CBAM is introduced, farming businesses will initially have “free allowances” for the amount of fertilizer they can import without paying extra charges.
But, as in the EU, those allowances are set to be phased out over the next decade, meaning that by the mid-2030s, all imports will be subject to the levy.
The higher costs, which are also blamed for a surge in food prices for consumers, come on top of plans by Labour to mirror many of Brussels’s environmental policies as part of its Brexit reset, which farmers fear will also add to their burden.
The deal, awaiting Andy Burnham’s approval, would link the UK’s emissions trading scheme (ETS) to the EU’s.
Read rest at The Telegraph
