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British farmers are already nursing input cost rises of up to 70 per cent, and the worst of the squeeze on the world’s food bill is still to come.
That is the blunt assessment from the boss of the Grosvenor Group, the 349-year-old property and farming empire controlled by the Duke of Westminster, who has warned that fertiliser shortages caused by the war in Iran will have a “dramatic” effect on global food prices next year.
Mark Preston, executive trustee of Grosvenor, told Business Matters that fertiliser prices were “already quite expensive” before the conflict, but had since climbed by between 50 and 70 per cent since hostilities began in late February. The trigger, he said, was the effective closure of the Strait of Hormuz, the narrow shipping artery through which a substantial share of the world’s fertiliser and the liquefied natural gas needed to make it must pass. Iran’s Islamic Revolutionary Guard Corps indicated on Wednesday that the strait could shortly reopen, but with roughly 1,600 vessels still stranded, the damage to supply chains is already done.
For UK arable farmers, the immediate growing season has largely been insulated. Most fertiliser earmarked for this year’s crops was bought and applied before prices ran away. The problem, Preston explained, is the planting cycle that follows. “Farmers are not buying that fertiliser, they’re sitting on their hands and hoping things will improve, which they probably won’t,” he said. The likely response, he added, will be a swing from winter cropping towards spring cropping, giving growers a little more breathing room, but at the cost of yield, planning certainty and, ultimately, the price on the supermarket shelf.
Grosvenor itself is unusually well placed to weather the storm. The group’s flagship Eaton estate in Cheshire, the Duke’s traditional family seat since the 1400s, runs a large dairy and arable operation that supplies millions of litres of milk to customers including Tesco and Müller, and leans heavily on cow dung rather than bagged nitrogen. Its other rural holdings span Lancashire and Scotland, complementing the Mayfair and Belgravia estates that anchor the group’s central London portfolio.
The wider picture is considerably more alarming. “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. He argued the food security risk now eclipses the energy story that has dominated headlines: “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.”
His warning echoes that of Yara International, the world’s largest fertiliser producer, whose chief executive cautioned last week that the conflict could push some of Africa’s poorest communities into outright food shortages. Domestic sentiment is already turning: research by Opinium this week found that 80 per cent of Britons are anxious about grocery prices, with retailers continuing to pass cost rises through to the till.
Grosvenor’s wider results illustrate just how mixed the trading climate has become for diversified British groups. Underlying profits fell 18 per cent to £70.5m last year, dragged down by its North American operations, although the UK property arm proved a notable bright spot, running at 97 per cent occupancy. The group’s largest scheme to date, the redevelopment of South Molton Street near Oxford Street — taking in offices, shops, a hotel and 33 homes, is on course for completion next year. In the North West, work has begun on the first phase of an ambition to deliver 700 social homes; 69 have been built near Chester and Ellesmere Port, with a further 120 due this year.
Hugh Grosvenor, the 35-year-old duke and one of Britain’s wealthiest individuals with an estimated fortune of £9.56bn, received dividends paid to family trusts that crept up from £52.4m in 2024 to £53.7m. The group’s total tax bill more than doubled to £248m, of which £200m was paid in the UK, reflecting buoyant property disposals that lifted personal taxes on income and gains by £61m and corporate income tax by £71.9m.
The company has also been doubling down on flexible workspace, a segment it believes is becoming structurally embedded rather than a post-pandemic fad. James Raynor, chief executive of Grosvenor’s property arm, said roughly 23 per cent of the group’s London offices were now flex space, with occupancy “well over 90 per cent”. Last week, the company broke ground on its first directly managed flexible workspace outside the capital, in Manchester’s Northern Quarter, a vote of confidence in the regional office market and in the appetite of SMEs for short-form, fully serviced space.
For owners of small and medium-sized businesses, particularly those in food manufacturing, hospitality and agriculture, Preston’s warning lands as a clear signal to lock in supplier contracts, hedge where possible and review pricing strategy ahead of what looks set to be a difficult 2027.
