The closure of the Strait of Hormuz has severely disrupted global fertiliser supplies, driving up costs for UK farmers by as much as 70%, according to Mark Preston, executive trustee of the Grosvenor Group. The knock-on effect is expected to have a dramatic impact on global food prices next year.
Supply Chain Disruption
The Iran war, which began in late February, has effectively closed the strategic waterway, throttling shipments of fertiliser crucial for crop production. While Iran's Islamic Revolutionary Guard Corps suggested the strait could soon reopen, around 1,600 vessels remain stranded. Preston noted that fertiliser was already expensive before the surge, which has added 50% to 70% to costs.
Impact on UK Farming
UK crops are unlikely to be affected this year as most fertiliser has already been applied. However, farmers are hesitant to purchase fertiliser for next season, hoping for an improvement that may not come. Preston warned: "Farmers are not buying that fertiliser, they're sitting on their hands and hoping things will improve, which they probably won't."
The Grosvenor Group, a multibillion-pound property and farming firm owned by the Duke of Westminster, operates a dairy and arable holding in Cheshire, producing millions of litres of milk for customers like Tesco and Müller. The company also owns rural estates in Lancashire and Scotland, as well as prime London properties in Mayfair and Belgravia.
Global Food Price Concerns
Preston emphasised that the fertiliser crisis is a severe problem worldwide, not just for the UK. "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," he said. The magnitude of food price increases will depend on when the strait reopens.
The closure has also cut off flows of liquefied natural gas, a key input for nitrogen-based fertilisers like urea. While the impact on Grosvenor will be limited due to its reliance on cow dung, the broader agricultural sector faces significant challenges. Farmers may shift to more spring cropping next year to adapt.
Wider Economic Effects
Recent research by Opinium found that 80% of Britons are worried about rising grocery prices, as retailers pass on cost increases to consumers. The head of Yara International, the world's largest fertiliser company, also warned that the Middle East war could cause food shortages and price rises in Africa's poorest communities.
Grosvenor Group Performance
Despite the crisis, Grosvenor posted an 18% decline in underlying profits to £70.5 million last year, impacted by its North American operations. Its UK property arm remained strong with 97% occupancy. The company is undertaking its largest project ever, the revamp of South Molton Street in central London, including offices, shops, a hotel, and 33 homes near Oxford Street, due for completion next year.
Owned by Hugh Grosvenor, 35, one of Britain's richest men with an estimated wealth of £9.56 billion and godfather to Prince George, the company aims to build 700 social homes in north-west England. So far, 69 have been constructed near Chester and Ellesmere Port, with another 120 planned this year.
The group paid dividends of £53.7 million to the duke's family and trusts, up from £52.4 million in 2024. Grosvenor paid total taxes of £248 million, including £200 million in the UK, largely due to property sales. The company is also investing in flexible office space, recently starting work on its first directly managed flexible workspace outside London, in Manchester's Northern Quarter.
