A farming group controlled by the Duke of Westminster is warning of “dramatic” rises in food prices due to spikes in fertiliser costs linked to the war in Iran. The closure of the Strait of Hormuz in the Gulf, through which large quantities of oil, gas and other fuels usually pass, has already led to jumps in fuel costs in the UK.
Supermarkets Absorbing Huge Extra Costs
This week, the British Retail Consortium (BRC) warned that supermarkets were already absorbing huge extra costs due to the conflict in the Middle East and said those costs would inevitably filter through to consumers. It wants the government to delay new tax and regulatory rules.
Farmers Face Up to 70% Cost Increases
Now, Mark Preston, the executive trustee of the Grosvenor Group, controlled by the Duke of Westminster, who is the godfather of Prince George, said costs for UK farmers are up by up to 70 per cent since the conflict began. That pain may not hit stores this year, as farmers are using up old stocks of fertiliser rather than the batches that have soared in price.
“Farmers are not buying that fertiliser, they’re sitting on their hands and hoping things will improve, which they probably won’t,” he said. He added: “It’s going to be a very, very dramatic problem for the world, not just the UK, in terms of food, just because so much fertiliser comes through those straits,” Preston said. “But farmers can probably do more spring cropping next year rather than winter cropping. So they’ve got a little bit more flexibility.”
Shop Price Inflation Falls Slightly
Shop price inflation fell slightly in April, but retailers warned this was the calm before the storm. Helen Dickinson, the chief executive of the BRC, said: “While we’re yet to see the full force of the Middle East conflict feeding into consumer prices, it will not be long before it begins to.”
Strait of Hormuz Reopening Uncertain
There was talk on Wednesday that Iran could soon reopen the Strait of Hormuz, where around 1,600 ships are stranded. But peace talks between Tehran and the US remain on a knife-edge, with a deal yet to be agreed.
Grosvenor Group's Farm and Land Holdings
The Grosvenor Group owns one of the UK’s leading farms in Cheshire, as well as rural estates elsewhere and land in central London. Mr Preston told The Guardian: “The concern is at least as much, if not more, around food and fertiliser than it is around oil, because there are alternative sources of oil. There aren’t very many alternative sources of nitrogen for the production of fertiliser.”
Food Inflation Could Hit 10%
In April, the Food and Drink Federation, a trade body, warned that food inflation this year could hit 10 per cent. The Bank of England has recently predicted that inflation could top 6 per cent by 2027, with food inflation at 7 per cent. Official inflation measures have it at 3.3 per cent lately, but that’s before big rises in food and fuel kick in.
Retailers Report Tumbling Footfall
Retailers have already warned that footfall in stores is tumbling as shoppers cut spending on all but the basics.
