British farmers are already grappling with input cost increases of up to 70%, and industry watchers say the worst impact on global food bills has yet to arrive.
That is the assessment from Mark Preston, executive trustee of the Grosvenor Group, the 349-year-old property and farming empire controlled by the Duke of Westminster. He warned that fertiliser shortages stemming from the conflict in Iran will have a dramatic effect on global food prices in 2027.
Preston told Business Matters that fertiliser prices were already elevated before the conflict began, but have since climbed 50 to 70% since hostilities started in late February. The trigger, he explained, was the effective closure of the Strait of Hormuz—a narrow shipping route through which a significant share of the world’s fertiliser and the liquefied natural gas needed to produce it must pass. While Iran’s Islamic Revolutionary Guard Corps indicated the strait could reopen, roughly 1,600 vessels remained stranded, with supply chain damage already done.
For UK arable farmers, the immediate growing season has largely been protected. Most fertiliser for this year’s crops was purchased and applied before prices surged. The problem lies in the next planting cycle. “Farmers are not buying that fertiliser, they’re sitting on their hands and hoping things will improve, which they probably won’t,” Preston said. Growers are likely to shift from winter to spring cropping, providing more flexibility but at the cost of yield, planning certainty, and ultimately higher supermarket prices.
Grosvenor itself is relatively well positioned. The group’s flagship Eaton estate in Cheshire—held by the Duke’s family since the 1400s—operates a large dairy and arable business supplying millions of litres of milk to Tesco and Müller, and relies heavily on manure rather than bagged nitrogen. Its rural holdings span Lancashire and Scotland, complementing the Mayfair and Belgravia estates that anchor the group’s central London portfolio.
The broader outlook is concerning. “It’s going to be a 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 surpasses the energy crisis 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 that the conflict could push some of Africa’s poorest communities into outright food shortages. Domestic sentiment is already shifting: Opinium research found 80% of Britons are anxious about grocery prices, with retailers continuing to pass cost increases through to consumers.
Grosvenor’s wider results show a mixed trading climate for diversified British groups. Underlying profits fell 18% to £70.5m last year, weighed down by North American operations, though the UK property arm proved a bright spot at 97% occupancy. The group’s largest project—the redevelopment of South Molton Street near Oxford Street, including offices, shops, a hotel, and 33 homes—is on track for completion next year. In the North West, the first phase of an effort to deliver 700 social homes has begun; 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 rose 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 expanding flexible workspace, a segment it sees as structurally embedded rather than a post-pandemic trend. James Raynor, chief executive of Grosvenor’s property arm, said roughly 23% of the group’s London offices were now flex space, with occupancy well over 90%. 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 SME appetite for short-term, fully serviced space.
For owners of small and medium-sized businesses, particularly those in food manufacturing, hospitality, and agriculture, Preston’s warning signals a need to lock in supplier contracts, hedge where possible, and review pricing strategy ahead of a potentially difficult 2027.