The shocking profits made by fertiliser suppliers

In the past year, three of the biggest suppliers of fertiliser in the UK have made an incredible £5.45 billion in profit.1 But where has all this money come from?

This shocking revelation comes at a time when much of the UK farming sector is in crisis. Last year’s report by Sustain uncovered the tight profit margins for many farms, leaving little in the bank to buffer against volatile markets and few reserves to build on-farm resilience to the unstable and changing climate leaving many farmers considering leaving the sector.2

Meanwhile the reliance on fossil fuel fertilisers is causing significant environmental problems. It’s not just through the energy-intensive manufacturing process but also the damage caused by excessive nutrients. Excess nitrogen reduces water and air quality, endangers human health, harms biodiversity and rivers, as well as contributing to climate change through nitrous oxide emissions.3

The UK government hasn’t been silent on this issue. They have committed to a target to reduce nitrogen, phosphorus and sediment pollution by 40% by 2037 (from the 2018 baseline) in the Environment Improvement Plan,4 and are committed to the post-2020 Global Biodiversity Framework Target 7 of reducing excess nitrogen lost to the environment by half by 2030.5 Alongside these targets, the Sustainable Farming Incentive (SFI) references whole farm planning, providing an incentive for nutrient management assessment, reporting and improvements.6

On-Farm Resilience

However, the government has missed a crucial part of the puzzle.

The latest National Adaptation Programme, required under the Climate Change Act, doesn’t reflect the urgency of greater on-farm resilience.7 It does nod to the SFI for integrated pest management to reduce pesticide use and associated costs and also recognises the benefits of agroforestry. However, the Programme does not include a reduction in fossil fuel fertiliser use, which is an important adaptation step for soil health, biodiversity protection, human health, the climate and ultimately longer-term food security.

The production of fossil fuel fertilisers contributes to a third of related GHG emissions, which totals at 5% of annual global greenhouse gas emissions.8 But the Government is yet to draw up a plan for reductions in fossil fuel fertiliser use as outlined in the Net Zero Strategy.9

Modelling work and case studies show that moving to agroecological farming, such as organic, is not only better for nature but helps build on-farm economic resilience.10 Farmers are no longer as exposed to the volatile fossil fuel markets and farm profitability can be improved.

Agro-ecological practices

Farmers need support to replace fossil fuel fertilisers with agro-ecological practices, such as rotations with nitrogen-fixing crops, the use of extensive ruminant livestock, the introduction of intercropping and cover crops. Agro-ecological practices involve the introduction of nitrogen to the soil through nitrogen-fixing plants such as legumes. This increases circularity of the farm, meaning nitrogen inputs originate on-site, further adding to the sustainability of the farming system. These practices also help build up soil organic matter and soil microbial populations to reduce surface runoff and erosion, while increasing carbon sequestration. Supporting farmers to transition to more sustainable systems such as Organic, and to adopt agroecological practices, needs to be central to the farm policies currently being developed by governments across the UK. 

As well as promoting and supporting organic farmers, the Soil Association is also supporting the development of a collaboration of organisations and academics to influence Government action around nitrogen. The Nitrogen Collaboration calls for an integrated approach to nitrogen, using systems thinking to tackle the problem of nitrogen waste and pollution as a system.

Progress

To do this, the Government requires metrics and data to measure progress towards sustainable soils. This includes taking stock of exactly how much nitrogen is being applied to the soil on each farm and how efficiently it is being used, as well as losses of nitrogen to the environment in other sectors, such as through industry and transport. This can be achieved by establishing a nitrogen balance sheet to account for the stocks and flows of nitrogen across the country, fed into by data from farm-level nutrient management plans and harnessed through nitrogen budgets.

1

https://www.farminguk.com/news/500-jump-in-fertiliser-firm-profits-likely-fuelling-food-inflation_62992.html

2

https://www.sustainweb.org/news/nov22-unpicking-food-prices-new/

3

https://www.soilassociation.org/media/21286/fixing_nitrogen_soil_association_report.pdf

4

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file

/1125278/Environmental_targets_consultation_summary_of_responses_and_government_response.pdf

5

https://www.cbd.int/gbf/targets/7/6https://www.gov.uk/government/collections/sustainable-farming-incentive-guidance#full-sustainable-farming-incentive-(sfi)-scheme-information-for-the-sfi-2023-offer-

7

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file

/1172931/The_Third_National_Adaptation_Programme.pdf