British farmers are already nursing input cost rises of up to 70 per cent, and the worst of the squeeze on the world’s food bill is still to come.
That is the blunt assessment from the boss of the Grosvenor Group, the 349-year-old property and farming empire controlled by the Duke of Westminster, who has warned that fertiliser shortages caused by the war in Iran will have a “dramatic” effect on global food prices next year.
Mark Preston, executive trustee of Grosvenor, told Business Matters that fertiliser prices were “already quite expensive” before the conflict, but had since climbed by between 50 and 70 per cent since hostilities began in late February. The trigger, he said, was the effective closure of the Strait of Hormuz, the narrow shipping artery through which a substantial share of the world’s fertiliser and the liquefied natural gas needed to make it must pass. Iran’s Islamic Revolutionary Guard Corps indicated on Wednesday that the strait could shortly reopen, but with roughly 1,600 vessels still stranded, the damage to supply chains is already done.
For UK arable farmers, the immediate growing season has largely been insulated. Most fertiliser earmarked for this year’s crops was bought and applied before prices ran away. The problem, Preston explained, is the planting cycle that follows. “Farmers are not buying that fertiliser, they’re sitting on their hands and hoping things will improve, which they probably won’t,” he said. The likely response, he added, will be a swing from winter cropping towards spring cropping, giving growers a little more breathing room, but at the cost of yield, planning certainty and, ultimately, the price on the supermarket shelf.
Grosvenor itself is unusually well placed to weather the storm. The group’s flagship Eaton estate in Cheshire, the Duke’s traditional family seat since the 1400s, runs a large dairy and arable operation that supplies millions of litres of milk to customers including Tesco and Müller, and leans heavily on cow dung rather than bagged nitrogen. Its other rural holdings span Lancashire and Scotland, complementing the Mayfair and Belgravia estates that anchor the group’s central London portfolio.
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