Fertiliser shortages will have ‘dramatic’ effect on global food prices, warns farming boss | Supply chain crisis

Fertilizer shortages caused by the Iran war have increased costs for UK farmers by up to 70% and will have a “dramatic” impact on global food prices next year, according to one of Britain’s most powerful property and farming companies.

Mark Preston, a managing trustee of the 349-year-old Grosvenor Group controlled by the Duke of Westminster, said fertilizer “was already quite expensive” before the 50 per cent to 70 per cent jump in prices since the Iran war began in late February.

The effective closure of the Strait of Hormuz, which Iran’s Revolutionary Guard Corps said on Wednesday could reopen soon, has restricted global supplies of fertilizer vital for growing food crops.

Preston said although UK crops were unlikely to be affected this year because most fertilizer had already been used, the knock-on effect could occur next year. “Farmers aren’t buying this fertilizer, they’re sitting on their hands and hoping things will get better, which they probably won’t,” he said.

The multi-billion pound company owns one of the UK’s leading farms – a dairy and farming operation in Cheshire, England – as well as rural properties in Lancashire and Scotland, as well as large parts of Mayfair and Belgravia in central London.

The company produces millions of liters of milk for customers including Tesco and Müller from its sprawling Eaton estate in Cheshire, where the Duke of Westminster has traditionally resided since the 1400s.

“This much fertilizer coming through these straits is going to be a very, very dramatic problem in terms of food, not just for the UK but for the world,” Preston said. “But farmers will probably be able to do more spring planting next year instead of winter planting. So they have a little more flexibility.”

The magnitude of the increase in food prices will depend on when the Strait of Hormuz, a key shipping passage where about 1,600 ships are stranded, reopens.

“The concern is about food and fertilizer, at least more than it is about oil, because there are alternative sources of oil. There aren’t a lot of alternative sources of nitrogen for fertilizer production,” Preston said.

The closure of the strait cut off the flow of liquefied natural gas, a key input for nitrogen-based fertilizers such as urea. Preston added that the impact on Grosvenor will be limited because the organization does not use a lot of fertilizer and relies on cow manure as much as possible.

His remarks came just days after the head of Yara International, the world’s largest fertilizer company, warned that war in the Middle East could cause food shortages and price rises in some of Africa’s poorest and most vulnerable communities.

Research by Opinium this week found 80% of Britons are worried about rising food prices resulting from retailers passing on cost increases to consumers.

Grosvenor saw an 18% fall in underlying profit to £70.5 million last year, hit by its North American operations. However, the property business in the UK remained a bright spot with an occupancy rate of 97%; Its biggest project yet is the regeneration of South Molton Street in central London, which includes offices, shops, a hotel and 33 homes near Oxford Street, and is due to be completed next year.

The company, owned by Duke Hugh Grosvenor, 35, one of Britain’s richest men with an estimated fortune of £9.56bn and godfather to Prince George, has a target of building 700 social homes in northwest England. So far 69 have been built near Chester and Ellesmere Port and a further 120 will be built this year.

The group has increased its dividend payment to the duke’s family and trusts from £52.4 million in 2024 to £53.7 million in 2024. Grosvenor paid total tax of £248 million against £107.4 million in 2024, including £200 million in the UK. This was largely driven by property sales in the UK, which increased personal taxes on income and gains by £61 million and corporate income tax payments by £71.9 million.

Grosvenor is investing more in flexible office space and last week started work on the first directly managed flexible workspace outside London in Manchester’s Northern Quarter.

James Raynor, head of the company’s property division, said around 23% of its London offices were flexible workspace and “over 90% are occupied, so it’s performing very well”.