‘Even if Iran war ends now, farmers’ costs will have to be passed on’

Even if Iran War Ends Now, Farmers’ Costs Will Have to Be Passed On

Ali Capper, a representative of British apple and pear growers, expressed concern upon learning of the war outbreak in Iran, describing her initial reaction as feeling “quite sick” over potential disruptions to the UK farming sector. With the agricultural industry in the midst of its critical planting phase, costs are surging due to the conflict’s effect on fuel and fertiliser prices. The recent announcement of a two-week ceasefire offers little relief for this season, as Ali notes that “even if it all ends tomorrow, the costs are baked in now.”

Latest data from independent consultants The Andersons Centre highlights a marked increase in farm operational inflation, reaching over 7% in March compared to the previous year. This marks the first assessment of the sector’s overall strain since the conflict began, with the firm cautioning about another “cost of farming squeeze.” Farmers, as reported by the National Farmers Union, indicate they cannot sustain these additional expenses, prompting the likelihood of higher food prices for consumers.

“We will have to pass this on,” Ali explains, emphasizing that the supermarkets she supplies will determine how much prices rise for customers.

Ali details a 40% jump in fertiliser costs, alongside a 100% surge in red diesel for her tractors and a 20% increase in transport expenses. The Strait of Hormuz, a vital route for a third of the world’s fertiliser, has been disrupted, leading to steep price hikes. Red diesel, reliant on Brent crude prices, has seen its cost soar, directly affecting production expenses. These factors are compounding the financial burden on food producers.

Ben Savidge, a potato farmer in Ross-on-Wye, Herefordshire, highlights the toll of high red diesel prices, which have risen to £96–£1.05 per litre from 65–70p in December. Despite absorbing the extra costs for now, he anticipates needing to renegotiate with customers to offset dwindling margins, citing a prior dry summer that slashed yields. “It just feels like one thing after another,” he says, adding that he will continue planting while hoping for better outcomes by year-end.

Patrick Crehan, managing fuel purchases for a 3,500-member agricultural consortium, reports that prices have climbed from 70p to 130p per litre before the ceasefire. Although recent costs have dipped slightly, he notes that some farmers are no longer optimistic about profitability. “They would rather not plant the crop and save money,” he says, observing that many are preparing to endure the financial strain.

Patrick also highlights the significant strain from escalating fertiliser, energy, and fuel costs, predicting that “it’s highly unlikely they’ll see a return” in profits. His firm, AF Group, purchases around 120 million litres of fuel annually, underscoring the scale of the challenge. Ali recalls the prior hardships from the Ukraine-Russia conflict, which caused a 30% production cost rise over two years, and warns that another shock could devastate the industry. “There’s no flex in the system,” she stresses, reflecting on past losses.

The Food and Drink Federation anticipates UK food inflation reaching at least 9% by year-end, even if the conflict resolves quickly. This underscores the interconnected nature of global events and their impact on local agriculture, with farmers now facing a precarious balancing act between production and affordability.