The introduction of the Carbon Border Adjustment Mechanism (CBAM) by the EU and the phasing out of free emissions allowances for imported fertilisers will result in the cost of nitrogen doubling by 2030, a new economic study has warned.

Usage of mineral N fertilisers is projected to drop by 22% across the EU as a consequence of the higher prices, with application levels of phosphorus (P) and potassium (K) expected to contract by 13% and 19% respectively.

Irish fertiliser usage is projected to fall by at least 16% in the south and east as a result of the higher prices, with a 30% reduction forecast for the west.

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A 7.7% drop in farm incomes is estimated for the EU as a whole as a result of the hike in fertiliser costs, with Irish agricultural incomes taking a hit of 12% or more.

The stark figures are included in a recent economic assessment of the effects of CBAM on EU fertiliser production and prices, and the broader implications for farm output and farmer incomes.

The study was undertaken by economists at the Johann Heinrich von Thuenen Institute in Germany.

Higher nitrogen prices will result in a 21% decline in EU fertiliser production and a 37% drop in imports.

The introduction of CBAM will have major implications for the EU fertiliser industry and for fertiliser usage, the study warned.

Higher nitrogen prices will result in a 21% decline in EU fertiliser production and a 37% drop in imports.

The introduction of elevated carbon costs will increase production costs for EU fertiliser manufacturers and “erode their competitiveness in international markets”, the report stated.

However, while EU fertiliser production is forecast to fall by more than one-fifth by 2030, the report claimed that the industry would have contracted by almost 80% in a non-CBAM scenario.

Worryingly, the study cautioned that regions like Ireland with higher fertiliser prices, due to more expensive transport costs, are likely to “experience a larger reduction [in usage] when prices double”.

Identifying imported fertiliser as a “major vulnerability” for EU agriculture, the study urged the promotion of alternatives such as improved manure recycling, the adoption of precision farming and the increased usage of “green fertilisers” such as clover.