Fertiliser shortages will have ‘dramatic’ effect on global food prices, warns farming boss | Supply chain crisis
Fertilizer shortages caused by the war in Iran have driven up costs for British 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, executive director of the Grosvenor Group, founded 349 years ago and controlled by the Duke of Westminster, said fertilizer “was already quite expensive” before the 50-70% rise in prices since the start of the Iran war in late February.
The effective closure of the Strait of Hormuz – which Iran’s Islamic Revolutionary Guard Corps announced on Wednesday could soon reopen – has limited global supplies of fertilizer, essential for growing food crops.
Preston said that while UK crops are unlikely to be affected this year as most fertilizers have already been used, the knock-on effects could be seen next year. “Farmers are not buying these fertilizers, they are sitting idly 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 arable operation in Cheshire, England – as well as country estates in Lancashire and Scotland, as well as swathes of Mayfair and Belgravia, central London.
In Cheshire, the company produces millions of liters of milk for clients such as Tesco and Müller of the sprawling Eaton Estate, where the Duke of Westminster has traditionally resided since the 1400s.
“It’s going to be a very, very dramatic problem for the world, not just the UK, in terms of food, just because a lot of fertilizer comes through these straits,” Preston said. “But farmers will probably be able to do more spring crops next year rather than winter crops. So they have a little more flexibility.”
The extent of the rise in food prices will depend on when the Strait of Hormuz, a major maritime passage where around 1,600 ships are stuck, reopens.
Preston said: “The concern is at least as much, if not more, about food and fertilizer than oil, because there are alternative sources of oil. There are not many alternative sources of nitrogen for fertilizer production.”
Closing the strait has cut off flows of liquefied natural gas, an important supply for nitrogen-based fertilizers like urea. The impact on Grosvenor will be limited, Preston added, because the organization doesn’t use much fertilizer and relies on cow dung when possible.
His remarks come days after the head of the world’s largest fertilizer company, Yara International, warned that war in the Middle East could cause food shortages and rising prices in some of Africa’s poorest and most vulnerable communities.
Research by Opinium this week found that 80% of Britons are concerned about rising food prices, which comes from retailers passing on cost increases to consumers.
Grosvenor recorded an 18% fall in underlying profits to £70.5 million last year, affected by its North American operations. Its real estate activity in the United Kingdom, however, remains a positive point, with an occupancy rate of 97%; its biggest ever project, the revamp of South Molton Street in central London, including offices, shops, a hotel and 33 homes near Oxford Street, which is due to be completed next year.
Owned by Duke Hugh Grosvenor, 35 – one of Britain’s richest men with an estimated fortune of £9.56 billion and godfather to Prince George – the company has ambitions to build 700 social homes in the north-west of England. So far, 69 have been built near Chester and Ellesmere Port, with another 120 to be built this year.
The group paid dividends of £53.7 million to the Duke’s family and his trusts, up from £52.4 million in 2024. Grosvenor paid a total of £248 million in tax, up from £107.4 million in 2024, of which £200 million was to the UK. This was largely due to UK property sales, which increased personal taxes on income and gains by £61 million and corporation taxes by £71.9 million.
Grosvenor has invested further in flexible office space and last week began work on its first directly managed flexible workspace outside London, in Manchester’s Northern Quarter.
James Raynor, managing director of the firm’s real estate arm, said around 23% of its London offices were flexible workspaces and “well over 90% are occupied, so they are performing very well”.
