Why is the war in the Middle East impacting UK farming?
Iran borders the Strait of Hormuz. Through this channel passes roughly:
- 20% of the world’s oil and gas shipments.
- One fifth of global ammonia and urea supplies.
These are key components used in food production, with fuel and fertiliser typically accounting for between 25-30% of total costs.
The Strait of Hormuz remains largely closed and disruption to global oil and gas markets has already caused significant economic damage. This has put food producing businesses, and the farmers and growers who provide the raw ingredients, under immense pressure.
Crude oil
A key ingredient for red diesel, a fuel used in off-road vehicles and machinery such as tractors.
Fertilisers
Boosts the growth of arable and horticultural crops, as well as grass and forage for livestock.
- Urea – one of the nitrogen fertilisers produced and applied to crops.
- Ammonia – a key feedstock for producing nitrogen fertilisers and not currently produced in the UK.
Natural gas
Used widely across agricultural production, including:
- In the production of nitrogen fertilisers, accounting for between 60-80% of the input costs associated with its production.
- Heating glasshouses which produce things like tomatoes, cucumbers, peppers and ornamentals.
- Providing heat for young poultry birds and regulate temperatures in sheds to keep birds comfortable.
CO2
A vital component for the food and drink sector, particularly meat processing and packaging, and is a by-product of fertiliser production.
How are different farming sectors impacted?
Arable crops
Eg, wheat, barley, maize, pulses, oilseeds, and oats.
Farmers busy planting spring crops in March, which require both fuel and fertiliser, and the use of these inputs is always high at this time of year.
With the costs increases coming at the same time, farmers are forced to pay more for these vital inputs.
Although most growers will already have bought their fertiliser for spring planting, it can also be applied later in the growing season. For example, nitrogen fertiliser can be used in late-April/early May to boost the protein content of milling wheat. But there are questions around how market volatility will impact cost.
Livestock and dairy
The war broke out at a critical time for these farms as pastures emerged from winter and into the main spring grass growing season. Cattle, which are often housed over the winter to protect them and the fields from wet weather, are released back onto the fields as the weather and ground conditions improve and farmers want plenty of lush grass for them to graze.
Fertilisers help sustain grass growth, providing plenty of nutritious food for grazing cattle. It also provides greater grass yield for farmers who will do multiple cuts over the spring and summer to build their stores of silage and hay to feed cattle in the winter months.
However, unlike most arable farms, livestock and dairy farmers do not typically buy fertiliser in advance due to weather, ground conditions, cash and storage constraints. Instead, they buy it when they need it, which means they can be more susceptible to volatility in global fertiliser markets.
The key concern for the livestock sector continues to be the cost of fertiliser and availability is beginning to be an issue for some. While orders have been placed, many are still waiting for delivery.
For those in this situation, it's causing delays when farmers want to be out in the fields getting good first and second cuts of sileage. Many were banking on good yields to replace forage stocks which are very low following the dry summer last year.
Horticulture
Eg, protected crop (tomatoes, cucumbers, peppers, mushrooms) soft fruits, top fruits, vegetables and salads, herbs, bedding and garden plants and cut flowers.
Similarly to arable farms, horticulture businesses require fuel and fertiliser, but most prominently felt by those planting crops in the spring such as potatoes, vegetables and salads.
For those growing protected crops in glasshouses, eg, tomatoes, cucumbers, peppers, courgettes and flowers, (some soft fruit is also grown under glass to offer year-round British supply) energy from heating contributes around a third of the total cost of production. These businesses are therefore facing significant cost increases from the disruption to natural gas supply chains.
It comes at a time when horticulture businesses are seeing large increases to their standing charges for electricity use, which started to come into play from October. The biggest hike came into force at the start of April.
This is a particular issue for horticulture businesses as the current standing charge tariffs are based on peak demand, which disproportionately affects seasonal users of high-consumption equipment, such as grain dryers, as well as seasonal supplementary lighting, storage and refrigeration.
This results in these users paying high standing charges all year round. Some members are reporting their electricity bill has jumped by an additional £1 million which is unsustainable, let alone with additional costs now coming from using national gas.
Poultry
Meat and eggs.
Poultry is a highly automated sector which relies heavily on energy to ensure businesses can run efficiently and optimise bird welfare.
Natural gas is needed to provide heat for young birds and regulate temperatures in poultry sheds to keep birds comfortable.
The increasing costs of haulage is also an issue for the sector as specialist bird movements are critical.
We are monitoring the impact on specialist feeds for poultry, which includes micro-nutrients which are imported from overseas and could be impacted by shipping disruption.
How much are input costs increasing by?
Markets are volatile and quickly changing in response to events in the Middle East.
Oil
Oil prices rose rapidly on Monday 9 March, with oil hitting close to $120 per barrel. Prices on Wednesday 18 March sat close to $108 per barrel. This compares to $71 on 27 February.
This has driven an immediate and widespread spike in red diesel prices, with NFU members reporting prices anywhere between 92pence per litre to 138ppl since the start of the conflict. This compares to less than 70ppl in the week before the conflict began.
As of 13 April, oil prices rose again to over $120 per barrel with the collapse of peacetalks between the US and Iran. While prices then stabilised slightly at $96 as of 15 April, this remains 30-40% higher than prior to the conflict.
Gas
Since European and UK gas prices peaked on Monday 9 March to over 160 GBp/therm (double where they were before the conflict began), prices had stabilised close to 128 GBp/therm. However, on Wednesday 18 March prices surged again to over 140 GBp/therm in response to attacks on an Iranian natural gas field.
As of 15 April, UK natural gas spot prices now sit at approximately 106 GBp/therm. This remains over 35-40% higher than on 27 February before the conflict began (~76 GBp/therm).
On-farm data
This all undermines farm profitability, as seen in anecdotal evidence from NFU members across the country who are experiencing significant price increases.
In the first few weeks of the conflict, members reported:
- Fertiliser prices rising by around 27%
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Red diesel costs increasing across a wide range, with some prices increasing up to 84%
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Kerosene prices showing similar volatility, with one member quoting a 148% increase in price
These figures are based on anecdotal evidence rather than comprehensive data, but they provided an indication of the emerging volatility.
In the two weeks leading up to 15 April, reports from members suggest that red diesel prices have ranged from 106-130ppl, averaging around 119ppl. This compares to around 65-70ppl before the conflict began, marking an 83% increase.
Is price the only issue?
Transparency
As well as increasing prices, farmers and growers are also citing price transparency as being a key issue. Many farmers are only being given a price once fuel has been delivered to the farm, making it difficult for farmers to decline or challenge the price. This limits their ability to plan and make decisions.
The only public UK fertiliser price data comes from the AHDB (Agriculture and Horticulture Development Board). This was only updated monthly, but as of 27 March, the Board has said it will provide weekly reporting. Read the AHDB's weekly report on fertiliser prices.
This follows Farming Minister Dame Angela Eagle’s ask of AHDB to provide reporting on fertiliser supply and to publish more reference data to support greater market transparency. The NFU is supportive of this data update.
Red diesel pricing is even less transparent than for fertiliser, with no recognised index. However, the Competition and Markets Authority has now committed to monitoring the sale of fuel, including red diesel, which will help provide some transparency within the market.
Are we seeing shortages of these inputs?
Fuel and fertiliser
We're not hearing of widespread issues with supplies of red diesel or fertiliser supplies just yet, but some members are reporting extended lead times for deliveries and some haven't received their full orders.
This is a fast-moving situation and, understandably, farmers and growers are worried about access to these key products over the coming months.
There are particular concerns given the UK’s lack of domestic fertiliser production. The UK currently imports most of its fertilisers, and for the fertiliser we do produce, we are completely reliant on imports of ammonia, an essential raw material for nitrogen fertilisers.
And, as harvest begins later in the summer, fuel will be vital to bring in the season’s crops.
However, the most immediate and pressing concern continues to be affordability over availability.
CO2
There have been media reports of government contingency planning for a 'worst case scenario' of CO2 shortages.
CO2 is a by-product of fertiliser production. Without a strong domestic fertiliser market also producing the country's CO2 requirements, the UK imports much of its CO2 from European countries. However, with significant increases to the price of natural gas - a key component in the production of fertilisers - some European fertiliser companies are scaling back production, meaning less CO2 is also being produced.
Despite this, we are not currently anticipating CO2 shortages. CO2 is also a by-product of bioethanol production and the government announced it would temporarily restart the Ensus bioethanol plant in Teesside to sure up supplies of CO2.
Are food prices going to go up?
It is likely that these cost pressures, which span across the whole food supply chain, will lead to food price inflation. We’ve already seen a similar situation play out with the Russian invasion of Ukraine which drove an ongoing cost-of-living crisis here.
Even if the war were to conclude, supply chains have been hit hard enough for long enough that additional costs have already been baked in. These might not be immediately noticeable on shop shelves but are likely to be seen in the coming months.
Protected crops
In mid March, the British Tomato Growers Association said it was likely that, in six weeks or so, the UK would see a rise in the price of things like tomatoes, peppers and cucumbers.
However, sector markets act very differently.
While some costs will inevitably be passed on to the consumer, some farming sectors will have to shoulder much of the additional cost burden. The question will be how long businesses can afford to do this for, with such costs drastically undermining farm profitability.
Consumer prices will also be determined by if, and for how long, retailers will shoulder any additional cost burden.
Cereals
The price of grain is set globally. These are based on supply availability, not the cost of production.
At the moment, AHDB reports that global supplies of wheat and maize remains comfortable. We are also expecting larger yields in Argentina, Australia and Canada to keep world markets well supplied, dragging global grain prices.
This means that, for many UK arable farmers, it will cost them more to grow the crop than they will be paid for it.
UK farmers are particularly vulnerable because, after leaving the EU, they have lost access to subsidy payments they used to get through the EU’s Common Agricultural Policy. These payments continue to provide a level of resilience to EU farmers, helping them to withstand global shocks such as these, which UK farmers now don’t have.
Poultry
It is unlikely that retailers will put prices up in a cost-of-living crisis, which means producers and the wider supply chain is most likely to absorb these additional costs.
Wider supply chain costs
While some sectors won’t be able to pass costs up the supply chain through to the consumer, the cost of production at farm level is only one aspect of retail costs.
Pressure from increasing oil and gas costs will be felt throughout the entire food supply chain, including processing, packaging and transport, all of which will contribute to food price inflation.
What can government do to support UK farming through this period?
The NFU met with the Defra Secretary of State, Emma Reynolds, and Farming Minister, Dame Angela Eagle, on 11 March to discuss the UK’s food resilience in light of the war.
Since then, the government has taken some important supportive measures, but there is more that could be done.
Transparency
The farming industry has had to deal with poor transparency in key input pricing, supply and trade data for many years, and when these markets are stable the risks have been manageable. Now though, volatility in price and availability challenges this status quo. A more resilient food system with farmers making more informed, market orientated decisions needs an appropriate level of transparency.
Defra fed our concerns around lack of transparency in the fuel market in to the Competition and Markets Authority, which has now committed to monitoring the sale of fuel, including red diesel. This will help provide some transparency within the market.
We then asked for similar transparency for fertiliser. Following the meeting with the NFU, the Farming Minister stated she was “asking AHDB to report back on fertiliser and red diesel supply and use across agricultural sectors, and to consider what they can do to publish more reference data to support greater market transparency for farmers and growers”.
Since then, the AHDB has announced it will report fertiliser prices weekly during the Middle East conflict. The NFU is grateful for the additional transparency that this will provide farmers. AHDB's weekly report on fertiliser prices can be accessed here.
Energy costs
There are further practical steps that can be taken now to help prevent a double hit to rising costs for energy. We’re calling on the government to look again at the increases to electricity standing charges, which came into affect on the 1st April 2026. It should act to ensure standing charge tariffs do not disproportionately affect farmers and growers.
The government has brought in support schemes to protect high-energy users against the sharpest of rises and these currently don’t apply to most farming and growing businesses.
Domestic fertiliser and CO2 production
On 19 March, Defra launched a consultation on plans to support innovation in the fertiliser sector and diversify supply. This is a much-needed long-term focus.
In 2023, CF Fertilisers significantly scaled back its manufacturing operations, meaning we now import 60%of our fertilisers. These imports mainly come from Europe, Egypt and the US.
For the fertiliser which is finished or blended in the UK, the shut-down of UK ammonia production in 2022 means we are completely reliant on imported ammonia. This mainly comes from North Africa and the US and so is susceptible to price spikes, delays and shortages when global supplies are disrupted.
The UK previously produced around 750,000 tonnes of ammonia each year, supporting both fertiliser and the supply of food-grade CO2.
Farmers need a fertiliser market that is reliable and affordable. The NFU will work with Defra to ensure the final framework is practical, boosts productivity and supports long term food security.
However, while boosting the domestic fertiliser sector is an important long-term goal, it won’t help farmers and growers through this immediate crisis.
Ensus bioethanol plant
On 26 March, the government announced a package of measures to temporarily restart the Ensus bioethanol plant in Teesside to shore up supplies of CO2, a vital ingredient in fertiliser production. The plant was mothballed in September 2025 following the government removing a 19% tariff on US ethanol imports.
However, the reopening of the plant is not conditional on it using British wheat, which is a disappointment as this would support British farmers at a time when they really need it. Historically, Ensus has favoured using majority imported maize as a feedstock over domestic wheat, and there has been no reference at all to the bioethanol production which is the primary output of the plant.
We continue to call on government to commit to retaining a viable bioethanol industry in the UK, which also produces highly sought after animal feed in addition to CO2 production.
Government engagement
The NFU continues to engage with the government at the highest level to ensure it has a clear picture of the impact this is having on domestic food production now and could have in the future.
What can be done to prevent future global shocks affecting UK food production and prices?
In the long-term, it all comes down to resilience. We need to find ways to prevent UK farm businesses becoming collateral damage to global politics.
This is about ensuring we have a stable homegrown food sector which can withstand shocks from global volatility and continue to produce food for the 70 million consumers of the UK.
Resilience key to food security
The government has repeatedly said that ‘food security is national security’. These are welcome words, but they need to be backed up by policy and real investment in building resilience into the UK’s food sector.
The NFU has outlined various policy areas in its new Building Farming’s Resilience’ report. It outlines practical policies and targeted investment which would help businesses to withstand sudden changes in things like market prices and weather events without them having a major impact on their ongoing viability, such as:
- Stabilise farming incomes.
- Drive productivity.
- Strength farmers’ position in the supply chain.
- Manage climate extremes such as drought and flooding.