‘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 British fruit grower, described feeling “quite sick” upon hearing about the outbreak of conflict in Iran. The escalation has already disrupted the UK’s agricultural sector, with growers facing mounting financial pressures during critical planting periods. Fuel and fertilizer prices have surged, forcing many to rethink their operations.

“ Sadly, even if the war stops tomorrow, the expenses are already locked in,” Capper remarked, representing the apple and pear farming community.

Recent data from The Andersons Centre, an independent agricultural research firm, reveals a 7% rise in farm operating costs this March compared to the previous year. This marks the first indication of the war’s broader economic effects on the sector. The group, which also collaborates with the Department for Environment, Food and Rural Affairs, warns of a renewed “cost of farming squeeze.”

For Capper, the impact is stark. Fertilizer expenses have climbed 40%, while red diesel—used for tractors and heating—has doubled in price. Transport costs have also increased by 20%, compounding the strain. The Strait of Hormuz, a vital route for a third of the world’s fertilizers, has been a key bottleneck, causing prices to spike dramatically.

Red diesel’s price surge is linked to Brent crude oil, the global oil benchmark. This has pushed production costs higher, with Capper anticipating further increases in plant protection products and packaging. She emphasizes that supermarkets will determine how much consumers ultimately pay, stating, “There’s no room for flexibility in the system.”

Ben Savidge, a potato farmer in Ross-on-Wye, Herefordshire, highlights the financial toll. Red diesel costs have risen from 70p to over £1.05 per litre, adding £5 per tonne to planting expenses. Despite this, he remains committed to his contract with buyers, hoping to renegotiate prices as margins shrink. “Last year’s dry summer hit yields hard, and now energy prices are up, it feels like challenges keep piling up,” he explains.

Patrick Crehan, who manages fuel procurement for a 3,500-member farming consortium, notes prices have fluctuated. Before the conflict, fuel cost around 70p a litre, but reached 130p just before the ceasefire. While prices have slightly dropped since Wednesday, many farmers now doubt their ability to profit from the season. “Some would rather skip planting this year to save money,” he says, citing widespread concerns over sustainability.

Despite most growers continuing their work, Crehan predicts long-term losses. “With fertilizer, energy, and fuel costs skyrocketing, it’s unlikely they’ll see a return,” he adds. His firm, AF Group, purchases 120 million litres of fuel annually, underscoring the sector’s reliance on stable energy prices. The Food and Drink Federation estimates UK food inflation could hit 9% by year-end, even if the war resolves quickly.

Capper recalls the aftermath of the Ukraine-Russia conflict, which devastated the industry with a 30% production cost rise. “We can’t afford another hit like that,” she says, stressing the fragility of the current situation. As the war continues, farmers brace for inevitable price hikes, relying on market dynamics to cushion the blow.