‘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
UK Agriculture Faces Persistent Challenges Amid Rising Expenses
The outbreak of hostilities in Iran has triggered a wave of anxiety among UK farmers, with many struggling to manage escalating operational costs. For Ali Capper, a representative of British apple and pear growers, the news of the conflict came as a shock during a critical planting period. She expressed concern over the potential ripple effects, stating that the financial strain is already embedded in the system regardless of the war’s duration.
Fertiliser and Fuel Price Surge
Recent data from The Andersons Centre reveals that agricultural running costs have surged by over 7% since last March, marking the first comprehensive analysis of the sector’s impact since the conflict began. This includes a 40% jump in fertiliser expenses and a 100% increase in red diesel prices, which farmers rely on for machinery and heating. Transport costs have also climbed by approximately 20%, compounding the challenges faced by growers.
“Even if the conflict ends tomorrow, the costs are baked in now,” Capper remarked, highlighting the difficulty of reversing the financial damage.
The soaring prices are partly due to the disruption of global fertiliser supply chains, with a third of the world’s fertiliser typically passing through the Strait of Hormuz. The blockade during the war has sent prices skyrocketing. Red diesel, in particular, has seen its cost rise sharply as Brent crude prices climb, directly affecting food production expenses.
Food Price Projections and Industry Strains
The Food and Drink Federation anticipates UK food inflation reaching at least 9% by year-end, even if the ceasefire lasts two weeks. Capper expects further hikes in plant protection products and packaging costs, leaving supermarkets to decide how much to pass on to consumers. She adds that the apple and pear sector has already endured a 30% production cost increase in 2022 and 2023, following the Ukraine-Russia conflict.
“We can’t go there again. There’s no flexibility in the system,” she said, recalling how many farmers faced losses during the previous war.
Potato grower Ben Savidge noted that red diesel prices have reached 96p to £1.05 per litre, up from 65-70p in December. While he absorbed the additional costs for this season’s planting, he hopes to renegotiate with customers to offset shrinking profit margins. “Last year’s dry summer hit yields hard, and now energy prices are rising, it feels like one challenge after another,” he explained.
Fuel Purchases and Farmer Uncertainty
Patrick Crehan, who manages fuel procurement for a 3,500-member agricultural consortium, reported that red diesel costs climbed to 130p per litre before the ceasefire. Though prices have dipped slightly since Wednesday, many farmers are wary of future expenses. “Some have stopped planting entirely, knowing it will cost more to grow and manage crops this year,” Crehan said. His firm, AF Group, purchases 120 million litres of fuel annually, and he forecasts that “it’s highly unlikely they’ll see a return” from these increased costs.
