Impact of Iran Conflict on UK Farming Costs
When fruit grower Ali Capper learned that war had erupted in Iran, she said she "felt quite sick" anticipating the consequences for the UK farming sector.
Farmers and growers, currently in the peak planting season, are facing escalating costs as the conflict drives up prices for fuel and fertiliser.
Although a two-week ceasefire has been announced to help resolve the conflict, Ali, who represents British apple and pear growers, notes that this comes too late for the current growing season.
"Sadly, even if it all ends tomorrow, the costs are baked in now."
Recent figures indicate that inflation for farm running costs is over 7% higher in March compared to the previous year.
Data from independent consultants The Andersons Centre, which provides analysis and research for the farming sector and has conducted studies for the Department for Environment Food and Rural Affairs, offers the first estimate of the overall impact on agriculture since the conflict began.
The Andersons Centre warns of another "cost of farming squeeze" as farmers report to the National Farmers Union that they cannot absorb these additional expenses, suggesting food prices will likely increase as a consequence.
On her farm in Suckley, Worcestershire, Ali reports that her fertiliser costs have risen by 40%, red diesel used for tractors has doubled in price, and transport costs have increased by approximately 20%.
A third of the world's fertiliser typically passes through the Strait of Hormuz, which has been effectively blocked during the conflict, causing prices to surge in recent weeks.
Red diesel, a fuel used in off-road vehicles, machinery, and heating by farmers, has seen price increases driven by the rising cost of Brent crude, the global oil price benchmark.
These factors contribute to the overall cost of food production. Even if the conflict ends within the next two weeks, the Food and Drink Federation anticipates UK food inflation will reach at least 9% by the end of the year.
Ali also expects increases in the cost of plant protection products and packaging.
"We will have to pass this on,"she says, adding that it is up to the supermarkets she supplies to determine how much of the cost is passed on to customers.
She notes that the apple and pear sector had already experienced a 30% increase in production costs throughout 2022 and 2023 following Russia's full-scale invasion of Ukraine.
"It was really brutal and, I have to say, when I woke up to the news that it had started again, in Iran, I did feel quite sick,"she recalls.
Ali mentions that many farmers went out of business or operated at a loss during the Ukraine-Russia conflict.
"We can't go there again. There's no flex in the system."
"One thing after another"
Potato farmer Ben Savidge reports that if red diesel prices remain high, planting costs will increase by approximately £5 per tonne compared to pre-Iran conflict levels.
"[Red diesel] was 65-70p a litre back in December,"he explains.
However, his recent purchases have cost between 96p and £1.05 per litre.
Currently, Ben is absorbing the additional planting costs on his farm in Ross-on-Wye, Herefordshire, where he grows potatoes destined for chips, having agreed contracts with customers earlier this year.
He hopes his strong relationship with customers will enable him to negotiate better prices as his profit margins have been significantly reduced.
"Last year we had an awfully dry summer which impacted yields drastically so now with our energy prices being hit like they have, it just feels like one thing after another."
"But he says he will continue to plant and 'just hope that it falls our way at the end'."
"Busy, difficult and testing"
Patrick Crehan, who purchases fuel for a consortium of 3,500 mainly agricultural farmers, states that before the conflict, fuel cost about 70p per litre. Just before the ceasefire, prices had risen to around 130p per litre, though they have decreased slightly since Wednesday.
He has received reports from farmers who believe they will not make a profit from their crops this year.
"We have had some examples where they would rather not plant the crop and save the money, because they know it's going to be so expensive to put the crop in and manage it over the course of this year,"he says.
Patrick notes that while most farmers are still planting their crops with the mindset of "we're just going to have to suck it up as we always do," he predicts it is unlikely they will see a return due to significant increases in fertiliser, energy, and fuel costs.
His company, AF Group, purchases approximately 120 million litres of fuel annually from various distributors across the UK, operating one of the largest fuel procurement operations in the country.
Although there is no shortage of fuel availability, Patrick has a bleak outlook on the current situation for the farming industry.
"I would describe it as busy, and difficult, and testing… the level of increases that we're witnessing, we just haven't seen them before,"he told the BBC.
