Warning food prices are set to spike in the UK due to Iran war

This spring, the most valuable commodity in agriculture is not sunshine or even rain, it is fertiliser.

By some estimates, up to half of global production of crops and livestock depends on the magical combination of minerals and chemicals that make up synthetic fertiliser.

But the Iran war is pushing up prices and squeezing availability of this fundamental element in the food chain at the start of the European and Asian growing season.

British fertiliser importers, farmers and growers have told Sky News that rising costs are squeezing food producers, and, in time, will trigger a food inflation spike for consumers.

Prices have rocketed because synthetic fertiliser is an energy product, dependent on the same natural gas we use to heat our homes and underpin our electricity grid.

The nitrogen that feeds plants around the world is produced from combining the hydrogen from methane (natural gas) with nitrogen in the air (via the Haber-Bosch process, familiar to chemistry students with long memories) to create ammonia.

Processed ammonia, in the form of urea or ammonia nitrate, is the raw material of industrial fertiliser, and up to 30% of global supply normally passes through the Gulf. As with oil and gas, the effective closure of the Strait of Hormuz has pushed up prices.

Urea has soared from close to $300 a tonne at the turn of the year to almost $700 by the end of March.

That leaves farmers facing a choice: pay double to produce a normal crop, a cost you may not be able to pass on to consumers immediately, or go without, and see yields shrink.

Either way, food prices will inevitably be forced up.

UK farmers, growers and ultimately consumers are exposed to these rising prices. Domestic fertiliser production has declined as industrial energy prices have risen and today we produce less than half of the synthetic fertilisers farmers require.

With European production increasingly uncompetitive, British importers have to look further afield.

At Nitrasol's Great Yarmouth terminal, they meet demand with urea ammonia nitrate imported from Trinidad, shipped first to Sunderland, and then down the North Sea coast to Norfolk.

A steady stream of lorries arrive to be filled before heading to farms from Scotland to the South West.

Prices agreed with customers before the war began are being honoured, but Nitrasol chairman John Fuller says they will inevitably rise, and, for the second time in four years, the UK is facing a food inflation spike.

'Worse than after Ukraine'

"In the last six weeks it's gone up probably by about 25% as we've had to fight off other buyers," Mr Fuller told Sky News.

"We had a shipment last Sunday, and those farmers that bought early are securing the old price, but for those who left it to the last minute, I'm afraid that we're having to buy from the new cargoes, those are more expensive.

"It's a really serious situation. In some respects, it's worse than it was four years ago in the Ukrainian situation, and we all know what happened six months later.

"There was 10% inflation, and that knocked the government right back. And I just hope that the government grips this."

Mr Fuller, who sits as a Conservative peer in the House of Lords, wants the government to cancel the adoption of carbon import taxes from next January.

A mechanism intended to prevent emissions being exported, many businesses believe they will simply load more cost on to industry.

Some 150 miles west, in the Cotswolds, beef farmer David Barton is already paying the price.

Ordering fertiliser to treat the pasture that will sustain his suckling heifers and calves through summer, and into next winter as silage, he found prices had risen from £370 to almost £500 a tonne, and would not be available until April.

"I really need it this year, because we had a very, very dry summer last year," he says.

"Our fodder stocks are low, and generally across the country they're low. But if I didn't put any on, it would be half the yield."

Beef farmers may not be able to pass rising prices on to customers immediately. It is sold into a global market, and, while it has seen double-digit inflation for months, the price is set beyond David's farm gate.

"Individual businesses are having to take all this risk, and take all of this price shock," he says.

"For the country to have food resilience and food security, we need these food businesses like myself to be profitable.

"We cannot farm and continue to produce food if it is below the cost of our production. We do need to make sure that we have more resilience in our food supply to make sure the country has the food it needs."

'Disaster' as gas up 90%

Horticulture is facing a similar squeeze, doubly so in the glasshouses of the Lea Valley, north of London, where around half a billion salad vegetables are grown every year.

At Valley Grown Nurseries, where the rows of crops are measured in miles, the sweet peppers are ready to pick and cherry tomatoes are a couple of weeks off.

They are sustained by hundreds of miles of hot water pipes, kept in the low 20s centigrade by gas heating, and a constant diet of fertiliser.

Their gas bill has gone up more than 90% In the last month but their prices, agreed with supermarkets last autumn, cannot shift.

"It's a disaster, and not only for this organisation, but every organisation that's involved in producing food with gas," says owner Jimmy Russo.

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Lee Stiles, of the Lea Valley Growers Association, says the government should declare horticulture an energy-intensive industry to cut its energy costs. Until then, growers face a choice.

"The growers are at a crossroads now," he said. "They've planted. For cucumbers, we're in full production. We're picking tomatoes. Peppers and aubergines are a few days and weeks away.

"They've got to make a decision. If they can't get more money for their produce, then they're going to have to either stop, send everyone home and lose some money, or carry on and lose even more."

(c) Sky News 2026: Warning food prices are set to spike in the UK due to Iran war