Fertilizer Shortages to Cause Dramatic Food Price Rise by 2027, Grosvenor Boss Warns
Britain’s farmers are already raising the cost of nursing equipment by up to 70 percent, and the worst of the squeeze on the world’s food bill is yet to come.
That’s the blunt assessment from the boss of the Grosvenor Group, the 349-year-old real estate and farming empire controlled by the Duke of Westminster, who warned that fertilizer shortages caused by the Iran war will have a “huge” impact on global food prices next year.
Mark Preston, chief executive of Grosvenor, told Business Matters that fertilizer prices were “already very expensive” before the dispute, but have risen by 50 to 70 per cent since the fighting began in late February. That, he said, would result in the effective closure of the Strait of Hormuz, a narrow shipping lane through which much of the world’s fertilizer and liquefied natural gas must pass. Iran’s Islamic Revolutionary Guard Corps indicated on Wednesday that the strait may reopen soon, but with an estimated 1,600 ships still stuck, the damage has been done.
For UK arable farmers, the fast growing season is pretty much over. Most of the fertilizer set aside for this year’s crops was purchased and applied before prices ran out. The problem, Preston explained, is the next crop cycle. “Farmers don’t buy that fertilizer, they sit on their hands and hope that things will be okay, which may not be okay,” he said. A possible response, he added, would be to switch from winter planting to spring planting, giving farmers breathing room, but with yield value, planning certainty and, ultimately, price on the supermarket shelf.
Grosvenor itself is unusually placed to withstand the storm. The group’s flagship Eaton estate in Cheshire, the Duke’s traditional family seat since the 1400s, runs a large dairy and farming operation that supplies millions of liters of milk to customers including Tesco and Müller, and relies heavily on cow dung rather than digested nitrogen. Other rural locations cover Lancashire and Scotland, with sites in Mayfair and Belgravia strengthening the group’s central London portfolio.
The wider picture is more alarming. “It’s going to be a huge problem in the world, not just in the UK in terms of food, because a lot of fertilizer comes with those problems,” Preston said. He pointed out that the threat to food security now goes beyond the energy issue that has been in the headlines: “The concern is at least as close, if not more, about food and fertilizer than it is about oil, because there are other sources of oil. There are not many other sources of nitrogen, for fertilizer production.”
His warning echoes that of Yara International, the world’s largest fertilizer company, whose chief executive warned last week that the dispute could push some of Africa’s poorest communities into food insecurity. Sentiment at home is already changing: a survey by Opinium this week found that 80 per cent of Britons are worried about grocery prices, with retailers continuing to pass on rising costs all the way to the farm.
Grosvenor’s extensive results show how mixed the business environment has become for various groups in Britain. Underlying profits fell 18 per cent to £70.5m last year, dragged down by its performance in North America, although the UK property arm proved to be a bright spot, operating at 97 per cent. The group’s biggest project to date, the redevelopment of South Molton Road near Oxford Street – which includes offices, shops, a hotel and 33 homes, is due to be completed next year. In the North West, work has begun on the first phase of the ambition to deliver 700 social homes; 69 have been built around Chester and Ellesmere Port, with a further 120 due to be built this year.
Hugh Grosvenor, the 35-year-old prince and one of Britain’s richest people with an estimated fortune of £9.56bn, has seen dividends paid to family trusts rise from £52.4m in 2024 to £53.7m. Total group tax doubled to £248m, of which £200m was paid in the UK, reflecting strong asset disposals which increased personal taxes on income and profits by £61m and corporate income tax by £71.9m.
The company has also doubled down on the flexible workplace, a segment it believes is becoming structurally embedded rather than a post-pandemic fad. James Raynor, Grosvenor’s chief property officer, said around 23 per cent of the group’s London offices are now flexible, with “more than 90 per cent” being occupied. Last week, the company unveiled its first fully managed flexible workspace outside the capital, in Manchester’s Northern Quarter, a vote of confidence in the regional office market and the desire of SMEs to seek a compact, fully serviced space.
For small and medium-sized business owners, especially those engaged in food, tourism and agriculture, Preston’s warning comes as a clear signal to close supplier contracts, hedge where possible and review pricing strategy ahead of what looks to be a tough 2027.
