UK food prices set to rise as fertiliser and energy costs jump during Iran war
British farmers, fertiliser importers and greenhouse growers warn that surging fertiliser and gas costs are setting up another round of food inflation.
British farmers, fertiliser importers and horticulture businesses are warning that food prices in the UK are likely to rise as the Iran war pushes up the cost of key farm inputs. Sky News reports that the pressure is building at the start of the European and Asian growing season, when demand for crop nutrition is particularly sensitive. Because synthetic fertiliser underpins a large share of global crop and livestock production, the shock is moving quickly from input markets into food production economics.
The immediate problem is that synthetic fertiliser is deeply tied to energy. Nitrogen fertiliser is made from ammonia, and ammonia production depends on natural gas through the Haber-Bosch process. Sky News said that as much as 30% of global ammonia-related supply normally passes through the Gulf, so the effective closure of the Strait of Hormuz has lifted prices sharply. Urea, a major fertiliser product, has climbed from roughly $300 a tonne at the start of the year to almost $700 by the end of March.
That leaves growers with a hard choice: pay much more to sustain a normal crop or cut application rates and accept lower yields. The UK already produces less than half of the synthetic fertiliser its farming sector requires, which keeps the country exposed to import markets. At Nitrasol’s Great Yarmouth terminal, demand is being met with urea ammonium nitrate imported from Trinidad. Chairman John Fuller said purchase costs had risen by about 25% over the past six weeks and warned that Britain could be heading toward a second food inflation spike in four years.
Livestock operations are already feeling the squeeze. Beef farmer David Barton said fertiliser for pasture, needed to carry suckling heifers and calves through summer and into winter silage, had risen from £370 to almost £500 a tonne and was not available until April. He told Sky News that after a very dry summer last year, fodder stocks were low and skipping fertiliser would mean about half the yield. At the same time, beef producers cannot always pass higher costs straight through because they sell into a globally priced market.
The same cost shock is hitting greenhouse vegetables. In the Lea Valley north of London, where around half a billion salad vegetables are produced each year, growers depend on both gas heating and constant fertiliser supply. Valley Grown Nurseries said its gas bill had risen by more than 90% in a month while prices agreed with supermarkets last autumn could not be adjusted quickly. Sector representatives are asking the government to classify horticulture as an energy-intensive industry, arguing that without relief some growers will have to cut output or continue operating at deeper losses.