As the drought continues to wreak havoc with this year’s grain harvest across Europe, the continent faces a potential food crisis. As Tom Tugendhat wrote on these pages on Monday, the impact of the Ukraine-Russia war on two of the world’s largest producers is worsening.
Wheat prices are up 30 per cent this year, feeding into costs everywhere. British crop yields are expected to be down because of the heatwave and there is no sign of the drought relenting. The low water levels of the Danube have pushed up the cost of moving grain from central and eastern Europe to the Black Sea, just as the escalating war further disrupts shipping throughout the region
Moreover it is not just a shortage of grain that imposes additional costs. The conflict in the Persian Gulf has restricted exports of natural gas from which fertiliser is made, and exports of fertiliser made there. About 35 per cent of the world’s fertiliser passes through the waterway, and since the conflict broke out in February, about a million tonnes of fertiliser have been stranded in the Gulf
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As if this concatenation of events were not bad enough, the Government is preparing to impose a new carbon tax on fertilisers which risks pushing hard-pressed farmers to the wall. The CBAM (carbon border adjustment mechanism), an EU-initiated levy imposed on imports based on the greenhouse gases emitted during their production, will take effect in January.
This is madness. The UK relies heavily on imported fertiliser and ammonia, following the closure of key UK production facilities in recent years. Farmers are threatening to leave their fields fallow, rather than produce crops at a loss. The levy should be delayed or scrapped. For Andy Burnham, who took office promising to bear down on cost of living pressures, this a looming crisis that he needs to get to grips with now.
On a visit to a farm, the Prime Minister announced a £65m drought package for agriculture, including extra money for on-farm facilities to store water and alleit so difficult to install reservoirs to be removed. This must be more than just a photo-opportunity for Mr Burnham. A coherent and practical set of measures to help farmers through the current drought, improve food security and hold down prices needs to be a policy priority
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