‘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 fruit grower, was shocked upon learning of the conflict in Iran. “I felt quite sick,” she said, reflecting on the potential effects for the UK farming sector. With the war disrupting global supply chains, agricultural producers are facing mounting expenses during a critical planting period. The recent two-week ceasefire, aimed at easing tensions, arrives too late to mitigate the damage for this season, according to Ali, who advocates for British apple and pear growers.

Latest data from The Andersons Centre, an independent research firm, indicates that inflation for farm operational expenses has surged by over 7% this March compared to last year. This marks the first assessment of the agricultural sector’s overall strain since the conflict began, highlighting concerns of another “cost of farming squeeze.” The firm, which also supplies analysis to the Department for Environment, Food and Rural Affairs, warns that rising expenses will likely force higher food prices.

Mounting Expenses on the Farm

Ali reports that her fertiliser costs have jumped by 40%, while red diesel, used for tractors, has increased by 100%. Transport costs have also risen by about 20%. These hikes are tied to the disruption of the Strait of Hormuz, a key route for a third of the world’s fertiliser. The blockage has led to sharp price spikes in recent weeks.

Red diesel prices, driven by Brent crude’s soaring cost, have climbed significantly. Before the conflict, the fuel cost around 70p per litre, but just before the ceasefire, it reached 130p per litre. Although prices have slightly eased since the ceasefire, the long-term impact remains daunting.

“Even if it all ends tomorrow, the costs are baked in now,” Ali said, stressing that the financial burden cannot be reversed. She noted that the apple and pear industry had already endured a 30% rise in production costs in 2022 and 2023, following Russia’s invasion of Ukraine. “It was really brutal,” she added, expressing worry about the current situation.

Ben Savidge, a potato farmer, shared similar concerns. He explained that red diesel prices have more than doubled since December, now ranging between 96p and £1.05 per litre. This has increased planting costs by approximately £5 per tonne. Despite this, he has agreed to a contract with his buyers, meaning he must cover the extra expenses for now. “Last year’s dry summer hit yields hard,” he said, adding that energy costs have compounded the challenges.

Patrick Crehan, who manages fuel purchases for a 3,500-member agricultural consortium, highlighted the financial strain. “Some farmers no longer believe they’ll profit from their crops this year,” he said. While most are still planting, hoping to endure the rising costs, he forecasts that many may struggle. “It’s highly unlikely they’ll see a return,” he warned, as energy, fuel, and fertiliser prices continue to climb.

Crehan’s AF Group buys around 120 million litres of fuel annually. He noted that the consortium’s average price has risen from 70p to 130p per litre, with some farmers considering skipping planting to save costs. “We have examples where they’d rather not invest in the crop,” he said, underscoring the industry’s precarious position.