“We’re supposed to be feeding the nation, not funding the Treasury’s green experiments.”
British farmers are sounding the alarm as the Labour government ploughs ahead with a controversial carbon tax on fertilisers, set to take effect on 1 January 2027.
Industry experts are warning that this move could drive up fertiliser costs by a staggering £50 per tonne, pushing up food prices and squeezing British farms already under pressure.
The tax is part of Labour’s newly announced UK Carbon Border Adjustment Mechanism (Cbam), included in the autumn Budget. The measure follows a brief consultation with industry players and is set to hit imports of aluminium, cement, fertiliser, hydrogen, and steel, but, curiously, not glass or ceramics.
Industry leaders are crying foul over the decision. They argue that taxing fertiliser in this way could devastate the entire food supply chain, hampering the competitiveness of British agriculture on the global stage.
As reported in Farmers Weekly, Lord Fuller, chairman of Brineflow, a major liquid fertiliser importer, expressed his disbelief: “This is a £150 million raid on farmers. It’s as if the Treasury is only interested in lining its own pockets with farmers’ hard-earned money.”
Fuller pointed out that small family farms will be especially hard-hit, with little chance of passing on these new costs through grain sales, given the global market pressures.
The objective of Cbam is to combat “carbon leakage,” but industry insiders are baffled. Britain’s fertiliser production relies almost entirely on imported ammonia, with very little still produced domestically. Fuller highlighted a glaring flaw: the tax would apply uniformly, regardless of the carbon footprint, making it even easier for the world’s worst polluters to compete on equal footing.
He added, “The way the government intends to tax this, on a flat-rate basis, will actually encourage the use of more pollutive fertilisers. While the Treasury is pushing urea, Defra is trying to phase it out. It’s a complete mismatch of policies.”
With the tax estimated between £50 and £75 per tonne, paid quarterly, farmers face not only increased costs but an additional bureaucratic burden. Many farm businesses operate on an annual basis, which could throw cash flow into chaos.
An Unlevel Playing Field with Europe
Adding insult to injury, the EU’s approach to a similar carbon tax is far more measured. Europe’s tax is set to be phased in over time, starting with just 5% in 2027, gradually increasing until it’s fully implemented by 2034. This means British farmers could be at a severe disadvantage for several years, shouldering the full burden while their European counterparts enjoy a softer rollout.
Michael Pater, managing director of Origin Soil Nutrition, explains the looming disadvantage: “With Cbam, all fertiliser imports would be taxed, driving up the price across the board. A carbon cost of £50 per tonne could add as much as £150 per tonne to the price of urea alone. British farmers would be facing a 90% disadvantage compared with the EU in the first two years alone.”
As the farming sector faces this seismic shift, many are left asking: has Labour considered the true cost of this policy? Will British farmers be forced to pay the price for a green agenda that appears to be detached from agricultural reality?
For the British farming industry, this latest tax feels like yet another blow in an increasingly hostile climate. As one farmer put it, “We’re supposed to be feeding the nation, not funding the Treasury’s green experiments.”
