Last month the Government said in autumn’s budget that it was proceeding with plans to introduce a new carbon tax on a number of crucial imports. There are fears it could have a massive impact on farming, food prices, and much more. We want to have a closer look at it here because it could mean importing fertiliser becomes more expensive.

The tax

The current plan is for the UK Carbon Border Adjustment Mechanism (CBAM) to come in on 1st Jan 2027. Its goal is to prevent carbon leakage. This is an interesting way that some businesses swerve emissions targets. Instead of producing products here, they move production to a country where regulations are less stringent and costs are lower. However, this undermines climate goals because the same polluting products are still being made, just elsewhere in the world.

The CBAM aims to tackle the issue of carbon leakage. It means an additional tax on imports with a big carbon footprint. Basically, it encourages businesses to choose greener, more sustainable products.

A number of different products will see the application of the new tax. This includes fertiliser, aluminium, cement, and hydrogen. Some products will be exempt though, such as glass and ceramics.

Impact

There is a lot of confusion about the impact of the tax. Farmers are fearing it could mean an additional minimum £50/t to pay for fertilisers. Some estimate it could be as high as £75/t. Looking at the whole agricultural industry, it could cost farmers £150m a year.

The tax could have a number of negative connotations. Most crucially, it would cause an increase in food prices. Producers would have to increase prices to cover the additional costs. As a result, it would hurt the consumers.

Higher taxes on fertiliser would massively hit the profitability of farms too. Ultimately, it could mean some cannot continue.

Another huge fear is introducing the tax on 1st Jan 2027 with no adjustment period would put the UK at a massive competitive disadvantage with the EU that would last years. The European Union is planning a similar tax, but is proposing to phase it in. They would introduce 5% of the tax in 2027, 10% in 2028, and yearly increase until 2034.

Finally, there is a concern the tax will actually encourage people to use the most polluting fertilisers. The plan is for a flat rate across products. However, this means the playing field will be level regardless of the carbon footprint of the product. So, where is the motivation to make people choose greener, more sustainable products?

Do you want to order fertiliser?

JS Hubbuck Ltd has a long history in the agricultural industry. We’ve been working with farmers for generations, offering products to grow crops and raise livestock. Our reputation is built on ensuring we provide a friendly service and fantastic prices.

So, if you want to order fertiliser or anything else, speak to us. We’d be happy to offer advice if you need any too.