CF Fertilisers has announced its County Durham plant will temporarily halt production of ammonia due to rocketing energy prices.
At current natural gas and carbon prices, CF Fertilisers said its ammonia production was "uneconomical", with marginal costs above £2,000 per tonne and global ammonia prices at about half that level.
The suspension of ammonia production also means that the Billingham plant will cease to produce CO2, which is a by-product of the ammonia production process.
CO2 is an essential ingredient in food production and food processing, with slaughterhouses and processing plants reliant on it to process and package food.
In a statement, CF Fertilisers said it intends to use the site’s capability to import ammonia to enable it to continue to run its ammonium nitrate (AN) and nitric acid upgrade plants.
The company added that it intends to fulfil all ammonia and nitric acid contracts and all orders of AN contracted for delivery in the coming months.
CF Fertilisers explained that it had not yet determined the exact date when it would begin the temporary shutdown of the ammonia plant.
It comes as farm businesses across the country are being affected by the ongoing energy crisis, with gas prices more than double what they were in early June and 11 times higher than this time last year.
Reacting to the development, NFU President Minette Batters it was 'extremely worrying' for the industry.
“We will be monitoring any impact this decision has on the immediate fertiliser market and we will be meeting with CF Fertilisers to understand what this suspension means for future fertiliser orders.
“The NFU will continue to engage with government on action to improve the resilience and transparency of the fertiliser market, which is crucial to maintaining and enhancing our domestic food production."
She added: "I am also urging the government to review how this decision impacts CO2 availability in the UK, which is essential in the food supply chain to process and package food.”
Matt Williams, of the Energy and Climate Intelligence Unit (ECIU), said the closure of the UK's main production plant could put fertiliser supplies at risk.
The rising price of gas may cost British farmers an extra £760 million for fertilisers made from gas this year, he explained.
"This comes on the back of rocketing energy bills for farmers, and harvests that could be cut in half by dry weather. At the root of all these problems is one cause: gas.
"Burning fossil fuels that are getting ever more expensive - and driving climate change and extreme weather - is putting farmers and food production at risk."
