Net zero border tax could double fertiliser costs for farmers

Farmers are facing a fresh threat from a proposed net zero import tax on fertiliser, which could double their costs and deepen a crisis already marked by the worst harvest in decades and a controversial inheritance tax.

The tax, modelled on the European Union's carbon border adjustment mechanism, would apply a levy on imported fertiliser based on its carbon footprint. The government has not confirmed details, but farmers' groups warn that the measure could push input costs up sharply, hitting smaller farms hardest. The warning comes as the industry reels from a series of heatwaves that have scorched crops across southern England, with some areas seeing no rain for months.

On a 500-acre farm in the Midlands, Martin Williams has stopped growing cereals altogether because of the risks. He now grows root crops, maize and grassland, and has signed up to the government's Sustainable Farming Incentive, which pays farmers for environmental work rather than food production. He described the summer as "pretty grim" and said the grass has not grown, leaving his crops looking poor. "We're losing about 300 million this year through the weather," he said. "Surely some of that money's gotta come back into farming to help us."

The government recently announced £15 million for reservoir building, but Williams said that would only build around 450 reservoirs, nowhere near enough. He also said the inheritance tax introduced in the October 2024 Budget had "absolutely smashed" confidence in farming. "Why would you invest in a farm when you know you're gonna lose 20% of it on your father's death or on your death?" he asked. Some farmers are now turning to solar panels and wind turbines to survive, he said, because they cannot make money growing food.

The harvest crisis is severe. Williams estimated that about a third of the wheat crop is missing from England south of Manchester, and that the country could see its smallest wheat crop in at least 20 years. The UK was once 75% self-sufficient in food, but that figure has fallen to around 60% and is likely to drop further this year.

The proposed fertiliser tax has sparked a political row. Critics, including former Conservative attorney general Sir Michael Ellis, called it "another attack from this hostile government" and said farmers were being treated as "the salt of the earth" who work all hours to produce some of the best food in the world. He pointed out that 30% of the world's fertiliser comes through the Strait of Hormuz, where tensions have driven up prices for urea and ammonia. "People only talk about the oil, but the fertiliser comes through too," he said.

Supporters of the tax argue that it is necessary to tackle climate change, which is itself a major threat to farming. John McTernan, a former political secretary to Tony Blair, said farmers were "feeling the fire" because of the climate crisis, and that a sensible carbon trading system would help stabilise agriculture. He also blamed the war in Iran and the crisis in the Strait of Hormuz on "a reckless president and a reckless prime minister in Israel", and said the UK should cooperate with the European Union to create a level playing field.

The debate reflects a wider split over who is responsible for the industry's troubles. Farmers themselves say they are being left to cope with the consequences of extreme weather, government policy and global instability, with no safety net. As Williams put it: "There's no longer a safety net, so farmers are on their own now."