Food inflation and production costs are set to surge at the end of the year as global fertiliser supply for essential crops has begun to fall.
The shortages look to apply even more pressure on the UK farming industry as farmers grapple with droughts, low animal feed supply and soaring production and operational costs.
According to finance analyst company S&P Global Market Intelligence, the UK can expect a 16% year-on-year fall in global exports in the final quarter, leading to internationally traded fertiliser supplies falling in demand if prices continue to increase.
The forecast drop follows an 8% decrease of global fertiliser exports in the first six months of this year compared with the same period in 2021, according to the S&P report.
The drop has been attributed to a range of factors, including high input costs for gas and reduced shipments from key fertiliser suppliers such as Belarus, China and Russia.
The volume of Russian fertiliser exports is down 30% compared with early 2022, and China down by more than half, after the two countries limited overseas sales of fertiliser.
As Russia is Europe’s biggest source of gas, and fertilsier prices hinge heavily on volatile inputs such as gas, costs are set to dramatically rise due to restricted resource supply as a result of the Ukraine invasion.
A fall in demand could also mean an expansion of crops that are less fertiliser-dependent, such as soybeans.
The news comes as food prices have pushed inflation back to the 40-year high seen in July, according to the latest data from The Office for National Statistics (ONS).
