Latest / Cereal Killers / Fertiliser Shocks in 2027: gas, geopolitics and the sulphur shortage

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Fertiliser Shocks in 2027: gas, geopolitics and the sulphur shortage · Cereal Killers

• 0:00
  Hello there, and welcome back to the podcast. I'm your host, Dr.
• 0:04
  Russell Sharp, and this podcast is going to go out across all three of Eutremus podcasts.
• 0:10
  That's Grass Me Up for Sports Turf and Lawn Care, Serial Killers for Arable
• 0:15
  Crops, and Hydroponics Daily for Hydroponics Growers.
• 0:20
  And the reason why, again, we're going to do a podcast for all three of those
• 0:24
  is because we're talking about a subject that's probably applicable to all three.
• 0:29
  And I'm going to sort of rank and explain the threats to fertilizer and pesticide
• 0:35
  prices in 2027 and beyond in the UK, because there is a number of threats on the horizon.
• 0:43
  So I want you to be aware of then the price of fertilizer that might skyrocket.
• 0:48
  Now, obviously, the first one we're all aware of is the cost of natural gas
• 0:54
  and geopolitical conflicts in Iran and Ukraine.
• 0:58
  Gas prices have increased dramatically oil prices have increased,
• 1:02
  and this has an impact on the price of fertilizer it takes a lot of energy to
• 1:08
  produce nitrogen in the harbour bosch process so they those prices of nitrogen which is the main.
• 1:15
  Element in fertilizers is going to be proportional to that however that's not
• 1:22
  the only impact you've got supply issues as well and stockpiling as people stockpile.
• 1:28
  That increases the price in the short term and then reduces it in the long term.
• 1:33
  You've also got supply of sulfur. Sulfur is a by-product of petrol production,
• 1:39
  desulfurization. They could take it out to make them burn cleaner.
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  And that's where the sulfur for fertilizer comes. And there's a massive shortage
• 1:47
  of that at the moment. So sulfur prices might increase.
• 1:51
  Now, that's probably the main threat, really, to fertiliser prices,
• 1:57
  could increase dramatically.
• 1:59
  Now, if Donald Trump...
• 2:03
  Does what he said he's going to do and solves the war in Ukraine on his first
• 2:06
  day in office. Oh no, that didn't happen, did it?
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  If he solves the war in Ukraine and that's a solution, then that's great.
• 2:15
  And if Iran de-escalates and we get trouble-free trade through the Strait of
• 2:20
  Hamus, then that potentially could have actually reduced fertilizer prices in 2027.
• 2:27
  It's not just the petrol though as i said sulfur is a major issue.
• 2:32
  Phosphates a lot of phosphates come out of russia and that trade has been restricted,
• 2:37
  i would imagine a lot of people have found backdoors and ways of getting in
• 2:40
  phosphates though from russia because trading with say serbia and then buying
• 2:45
  off serbia and things like this countries that are allowed to trade with russia
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  and then countries that we are then allowed to trade with
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  so we can trade with serbia and serbia can trade with russia and things like that.
• 2:57
  It's the sort of thing that happened in the Gulf War as well.
• 2:59
  Other things, a lot of humates, humic acids come out of Eastern Europe and Russia
• 3:03
  and Belarus and places like that. So it's not just nitrogen and the big fertilizers that are an issue.
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  And obviously, pesticides will increase in cost because they are energy intensive
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  to produce as well. So your weed killers, your insecticides, your fungicides.
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  However, because they're already a high price the relative impact will be less
• 3:26
  so fertilizers especially agricultural crop for,
• 3:30
  arable crops and grasslands they're going to be really cheap and so a increase
• 3:35
  in the cost of fuel dramatically impacts the cost of those at the farm gate however,
• 3:42
  a the the increase in fuel cost for production for a pesticide which is already
• 3:47
  very high because most of that
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  cost is due is profit for the company that they can then invest in R&D.
• 3:55
  That's why you know syngenta make a product that controls leather jackets and
• 4:00
  that's like one thousand two thousand pounds a litre and you can guarantee that's
• 4:05
  not oil prices that guarantees that it's two thousand pounds a litre it's two
• 4:08
  thousand pounds a litre because,
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  because of the the intellectual property they can they can they can charge that
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  to in this case sports turf and growers it's like that i don't know what it
• 4:20
  is now but at one time it was very high, £1,000, £2,000 a litre.
• 4:24
  There is the second biggest threat is much more certain and probably just as
• 4:33
  big, but it's very certain what's going to happen with this one.
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  And that is the UK carbon border adjustment mechanism.
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  And this is a major impact. This has already happened in Europe.
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  Shout out to Tom Cundiff, who has made me aware of this one.
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  I wasn't aware of this one but this is this is going to be a massive one and,
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  it basically is adjustments for to make sure that anything's produced abroad with really high carbon,
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  carbon dioxide production levels they have the same sort of,
• 5:07
  tax and burden as if you were to produce them in the uk so europe had its own
• 5:13
  carbon border adjustment mechanism,
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  it was implemented in january this year and the the imports plummeted 25 percent,
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  i'm not sure what effect that had on the price of fertilizers but certainly
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  the amount imported dramatically reduced,
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  and so the uk are inducing this this tax will steadily increase the cost of
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  high carbon imports especially fertilizers pushing up the baseline fertilizers
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  so again this is going to be more,
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  this is impact can be felt more.
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  Arable with arable farmers because they're low cost to begin with bulk fertilizers,
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  could be massive on the effects but the impact that's going to have on,
• 5:58
  crop prices and food prices is going to be massive and i don't think the government
• 6:03
  probably realized that and with other increases in you know inflation on food
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  prices that is something that they're not going to.
• 6:11
  Think it's going to be a shock to the system and bizarrely they've also,
• 6:16
  because of food prices are going high they've also reduced tariffs,
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  on fertilizers so at one point they've put basically a tariff on carbon and
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  then they're taking off a tariff temporarily on fertilizer imports it's like,
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  all parts of the government don't know what they're doing so that this reduction
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  in tariffs that's occurring next year apparently that's temporary,
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  and that will sort of offset this carbon mechanism thing this CBAM,
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  and then eventually the price will just rise dramatically so that's something
• 6:51
  to watch out for it'll probably be in the news as we get into January and things
• 6:56
  like the National Farmers Union will be going on but combine that with imagine imagine if,
• 7:02
  rather than de-escalation you've got escalation of the Iran European conference
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  conflict imagine you know.
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  Israel was to further, you know, cause trouble in other countries, not just Iran.
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  Imagine Russia was to invade parts of Eastern Europe, which they've sort of,
• 7:21
  you know, built up troops and things like this.
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  Then to combine that with carbon adjustment mechanism and the price of fertilizer
• 7:27
  could dramatically increase.
• 7:29
  We talked about their phosphate supply in Russia.
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  Global phosphate market is heavily
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  concentrated, with Morocco holding approximately 70% of known reserves.
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  Very very commonly quoted fact it's but the problem there is it's mined in the
• 7:44
  disputed territory of western sahara officially technically
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  according to the united nations i think western sahara is still owned by spain
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  it didn't really do very well in,
• 7:55
  ceding that territory decolonizing it and so there was a messy breakup and now
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  morocco claim it it also the separatists there and so,
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  supply could be very very linked to you know.
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  Islamic fundamentalism in that area building up and things like this so something
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  to watch out for however you know people have vested interests in that,
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  fertilizer prices the next one we're going to go into is crop yields and commodity
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  prices fertilizer prices are commonly tied to farm profitability when crop prices
• 8:29
  rise fertilizer manufacturers often increase their prices in response,
• 8:34
  to confident farmer demand.
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  However 2025 and 2026 grain prices were low but in the UK yields were low as
• 8:43
  well so mean higher input costs severely squeezed farm margins.
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  So global fertiliser shortages higher prices could force farmers to skip applications,
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  that could further impact yield and drive up food prices and that paradoxically
• 9:00
  gives suppliers more room to increase their prices.
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  So it's a bit of a positive feedback loop there.
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  Next up, number five, I'd say more for the horticulture, sports turf, lawn care sector.
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  The UK Labour government have decided that they're going to sanction companies
• 9:22
  operating in the occupied territories of Israel, Palestine,
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  and ICL are operating in the Dead Sea Works in the occupied territories.
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  And by definition, then they should be sanctioned by the UK government.
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  If they do that then icl then probably one of the largest suppliers of fertilizer
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  for the horticulture sector and especially sports turf in uk and ireland,
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  could be sanctioned and stop production in which case supply would be limited
• 9:55
  and you'd have to go to other companies that supply them such as ourselves origin and.
• 10:01
  Plenty of others especially ireland ireland's massive on icl products especially
• 10:07
  gaa so you think about all his gaelic,
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  you know republican you know hating the english sort of sports they all promote
• 10:16
  icl's products and then yet you've got the likes of bohemians wearing,
• 10:21
  palestinian shirts you've got the irish national team in football doing you
• 10:27
  know bowing their heads and things like when the israeli national anthem and
• 10:31
  protests and things like that,
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  and threats of action.
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  Sporting, what's the word, sporting boycotts against Israel.
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  And all in Ireland, massive, you know, pro-Palestinian action is massive in
• 10:46
  Ireland. And yet they seem to forget that all their stadias,
• 10:50
  all their GAA stadiums, all their golf courses are being supplied by ICL.
• 10:55
  However, there's no, I don't think they sanction Israel because Ireland is,
• 11:00
  in inverted commas politically neutral and whereas the uk we are threatening
• 11:06
  that so that could be a massive one icl could,
• 11:09
  in theory not be produced but do i believe that the uk government will get around to sanctioning.
• 11:16
  Israeli companies operating in in the occupied territories no i don't i think
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  the uk government will threaten it and i think they're too busy doing other
• 11:24
  things like raising taxes to be bothered to to do that so that's that,
• 11:31
  number six this is a massive one for horticulture,
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  hydroponics but mass probably biggest on hydroponics and that is regulatory
• 11:40
  harmonization which means that everyone,
• 11:43
  great eyes glaze over and stop listening but it's actually massive it could
• 11:47
  destroy the hydroponic industry as we know it and could have a massive impact
• 11:51
  on horticulture especially sports turf.
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  And a medium effect on arable crops and that means that the eu implemented strict
• 12:01
  new biostimulant regulations in 2026 they already had stricter fertilizer labeling and registration,
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  requirements for every member state pretty much apart from ireland and the uk and then the uk left.
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  As of late 2026, the UK government doesn't have these requirements,
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  but there's ongoing proposals to harmonise.
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  And all the NGOs and companies and consultancies, things like this,
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  are going to be pushing really hard for this.
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  The large agrochemical companies are going to be pushing hard for this because
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  it's a barrier to entry. It's money to be made for consultancies.
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  And what's going to happen is that all the small companies producing 50 different
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  types of fertilizer and biostimulants, they're all go out the window.
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  They will go to the drain because they can't afford £80,000 to register every single product.
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  And Utrema, we will probably lose half of our portfolio if these registrations
• 13:00
  go through, because I am not paying £80,000 to register one of our least selling
• 13:05
  products. I'm trying to think of one.
• 13:07
  I probably won't name them for commercial reasons. But yes, horticultural dechlorinator,
• 13:13
  for example, we don't sell a massive amount of we would just ditch that because um,
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  we're not spending i'm not spending 80 000 pounds of my hard-earned money to
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  register that and if i was a hydroponic seller of a niche range and i had you
• 13:26
  know three different types of pk products and a boost and all this then you
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  just get rid of them you'd have to get rid of them all
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  and so this would destroy,
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  the hydroponic industry apart from the main players who would get even more
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  dominance you know in sports turf you'd lose all those biostimulant companies
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  selling niche sort of products.
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  And in agriculture you would probably the sort of products you see at groundswell,
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  up-and-coming companies are.
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  Your niche products you would just be relying on yara and and people like that
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  and and bog standard big fertilizers and and there would be one or two biostimulants,
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  so that would be a massive impact so it wouldn't impact,
• 14:08
  farmers so much that one but you know it would be of all the six that would
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  be the the bomb for sort of companies like you tremer who are,
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  up and coming fertilizer companies and biostimulant companies trying to make
• 14:22
  a name for themselves with novel and interesting products,
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  it sort of feeds its way into sort of,
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  you would have to get funding to launch companies and you would have to go to
• 14:33
  the city of london to launch a product which is silly because you know we look
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  the beauty of the uk system is that we can,
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  develop a product in our laboratory we can test it in a field and we can check
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  if it's if it works and grows grass or.
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  You know carrots better than than anything else and then we can launch it and
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  see if the industry wants it you know you can do something in the lab check it works,
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  and and you might say well we need you know to raise two million pounds in funding
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  but if you do that then you've got all these investors and then you launch it
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  and it's a dud then you've wasted,
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  you know seven years registering it two million pounds in startup funding venture
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  funding and without that just because you need registration,
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  so i think it's a silly thing i think we've got a better system in the uk and
• 15:20
  we're trying to adopt eu rules on fertilizer and food just so we can be friends
• 15:24
  with them again and they'll start buying our stuff and i don't think we need to you know,
• 15:30
  switzerland and norway don't so why do we have to bend over backwards when we're a big country,
• 15:35
  anyway that's enough of a rant for me if you think differently let me know uh
• 15:39
  if you disagree with anything on this topic then uh more than happy to debate
• 15:44
  that and take on your your uh,
• 15:47
  your opinions i'll come back with a technical,
• 15:52
  plant science based podcast next because it's enough about regulations and laws
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  and governance and things like that so yeah i thought this might be interesting
• 16:01
  very thanks for the suggestion and see you on the other side,
• 16:06
  that sounds like i'm about to die doesn't it anyway see you on the next podcast
• 16:09
  hear you on the next podcast goodbye.