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

Ali Capper, a fruit grower, was shocked by the outbreak of war in Iran, describing her reaction as ‘quite sick’ upon learning of its impact on the UK farming industry. With the conflict now affecting supply chains, agricultural producers are facing mounting expenses as fuel and fertiliser prices surge during the critical planting season. Despite the hope of a two-week ceasefire, Ali argues that the financial strain has already taken hold, stating that ‘even if it all ends tomorrow, the costs are baked in now.’

Costs Skyrocket Amid Rising Inflation

New data from independent consultants The Andersons Centre indicates that inflation for farm operational expenses has climbed by more than 7% in March compared to the previous year. This marks the first assessment of the sector’s overall burden since the conflict began, with the firm highlighting a potential ‘cost of farming squeeze.’ The National Farmers Union has reported that farmers are struggling to cover these additional expenses, warning that food prices may inevitably rise as a result.

“We will have to pass this on,” Ali says, noting that the final pricing decisions rest with the supermarkets she supplies. “We can’t go there again. There’s no flex in the system.”

Ali’s farm in Suckley, Worcestershire, has seen a 40% spike in fertiliser costs, while red diesel—used for tractors and heating—has increased by 100%. Transport expenses have also risen by approximately 20%. These pressures stem from the disruption of global fertiliser routes, with a third of the world’s supply typically passing through the Strait of Hormuz, now effectively blocked by the conflict. Red diesel prices, tied to Brent crude, have soared as oil costs climb.

Ben Savidge, a potato grower, highlights the financial burden: “If red diesel remains expensive, planting will cost around £5 more per tonne than before the Iran conflict.” He recalls paying 65-70p per litre in December but now spends between 96p and £1.05p per litre for his latest deliveries. Though he’s absorbing these costs for now, he hopes to renegotiate with his customers to offset losses from previous years, when a dry summer reduced yields and now combined with energy price hikes, creates a ‘one thing after another’ scenario.

Consolidated Fuel Costs and Uncertain Futures

Patrick Crehan, who manages fuel purchases for a 3,500-member agricultural consortium, notes that prices have fluctuated significantly. Before the conflict, he paid about 70p per litre, but just before the ceasefire, the cost reached 130p. While it has since dipped slightly, many farmers now question whether they can profit from their crops. “Some are considering skipping planting altogether to save money,” Patrick says, as the combined increases in fertiliser, energy, and fuel costs threaten their viability.

His company, AF Group, procures around 120 million litres of fuel annually, underscoring the widespread effect of the crisis. Even with the ceasefire, the Food and Drink Federation anticipates UK food inflation reaching at least 9% by year’s end, reflecting the cascading impact on production and distribution. Ali, reflecting on past challenges, mentions the 30% production cost rise from the Ukraine-Russia conflict, which left many farmers struggling. “It was really brutal,” she recalls, adding that the recent war in Iran feels like a return to similar hardships.