UK Ministers Discuss Suspending Carbon Tax on Fertiliser Amid Food Inflation Concerns

The Story

UK ministers are in discussions about suspending a carbon tax on fertilisers due to take effect early next year, as part of a package of measures aimed at curbing food inflation. Government sources said the move is being considered to discourage farmers from leaving fields fallow, but noted tension between the Treasury and the Department for Business and Trade (DBT) over the required amendment to the Finance Act 2026. The National Farmers’ Union stated that a proposal has been discussed but nothing has been confirmed.

Key Facts

• Ministers are discussing suspending a carbon tax on fertilisers and suspending import tariffs on foods including bread, biscuits, and bananas.
• Government sources said they are looking at suspending tariffs on fertilisers to prevent farmers from leaving fields fallow.
• The Treasury does not want to amend the Finance Act 2026, which would be necessary to suspend the carbon tax.
• The DBT is consulting on ways to reduce fertiliser prices and is working with farmers to assess all tariffs; imports from some countries currently face a 6% duty.
• Farmers have been considering leaving fields fallow because rising costs could lead to selling the 2027 crop at a loss.
• Fertiliser costs have risen sharply since the Iran conflict began; about 35% of the world’s fertiliser passes through the Strait of Hormuz, and 1 million tonnes are stranded in the Gulf.
• Fertiliser producers said the new tariffs, matching an existing EU scheme, could add £100 per tonne; the current price is £618 per tonne (Agriculture and Horticulture Development Board).
• The proposed tax is a carbon border adjustment mechanism (CBAM) on importers based on emissions; the fertiliser industry accounts for roughly 5% of global greenhouse gas emissions.
• Ministers are also cutting fuel taxes for farmers: red diesel and rebated biodiesel rates have been cut by more than a third, described by the Treasury as the lowest in over two decades.
• Analysis from the Central Association for Agricultural Valuers (CAAV) projects that a 500-acre wheat farm could lose £70,000 in 2027 due to higher costs from the Iran war.
• Jeremy Moody, CAAV secretary, said: “This would stop us adding self-inflicted damage to an already difficult situation when we no longer produce fertiliser to justify such a tariff.”
• The UK produces approximately 40% of its nitrogen fertiliser and imports the remaining 60%.
• The DBT was contacted for comment; the Treasury declined to comment.

Conflicting Reports

The article reports tension between the Treasury and the Department for Business and Trade over the need to amend the Finance Act 2026. The National Farmers’ Union stated that a proposal has been discussed with the Treasury and DBT but nothing has been confirmed.

Still Unclear

• Whether the suspension of the carbon tax or tariff measures will be implemented, and what the final decision timeline is.

Misconceptions

No widespread misconceptions addressed in the source article.

Key Figures

• Jeremy Moody, Secretary of the Central Association for Agricultural Valuers (CAAV)
• National Farmers’ Union (unnamed sources)
• Treasury (declined comment)
• Department for Business and Trade (contacted for comment)

Sources: The Guardian