Labour has been accused of dealing another Budget blow to farmers with its so-called “fertiliser tax”.
In the Budget, Chancellor Rachel Reeves confirmed plans to introduce a levy on key agricultural imports such as fertiliser in order to meet net zero goals.
The carbon border adjustment mechanism (CBAM), due to begin in 2027, will tax carbon-emitting imports such as fertiliser, cement, aluminium and products from the hydrogen and steel industries.
It comes amid outrage over the Chancellor’s £1 million cap on agricultural property relief, nicknamed the “family farm tax”, also introduced in the Budget.
The carbon tax on fertiliser is expected to be set at around £50 to £75 per tonne.
Government sources said they expect the impact on farmers to be modest and for there to be no effect on food prices.
But farmers disagree, warning it could hurt business and feed through to supermarket shelves.
David Walston of Thriplow Farm, a 900-hectare family farm, told The Telegraph’s Daily T podcast that the carbon tax on fertiliser had been introduced “under the radar” compared to the controversial changes to agricultural property relief.
“They are going to be putting a tax on imported fertiliser because fertiliser is the biggest carbon dioxide source of food production,” he said.
“Obviously the philosophy is we want to reduce that, so let’s tax the fertiliser. Well, you know, if you tax fertiliser, you make it more expensive. We’re going to use less of it.
“That means we’ll produce less food. We’re not going to eat less food in this country, so we’re just going to import it from a country that doesn’t tax fertiliser.”
Lord Fuller, chairman of the liquid fertiliser firm Brineflow, said: “This is a £150 million raid on farmers who will find it very difficult to pass that cost on through increased grain sales as they are traded on global markets.”
A UK CBAM was first proposed by the Conservative government in 2023 as part of its net zero drive for “industrial decarbonisation” and consultation began in March 2024. The Government in the Budget that it would press ahead with the measure.
Tim Farron, the Liberal Democrats’ environment spokesman, told The Telegraph: “Farmers have been hammered for years by the Conservative Party through botched trade deals and huge cuts to farmers’ incomes.
“What we saw at the Budget was, instead of supporting our farmers, the new Government dealt them more crushing blows.
“The Chancellor urgently needs to rethink her policies towards farmers, give them the proper support they deserve and that must start by scrapping the disastrous family farm tax.”
The Government was approached for comment.
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