The closure of the Strait of Hormuz has caused disruption of fertiliser supplies, which are used to grow fruit and vegetables
The boss of one of the world’s biggest fertiliser producers has warned the price of weekly food shops could rise within the next few months due to the war in Iran.
Svein Tore Holsether, chief executive of Yara, told the BBC that the price increases faced by food producers will be passed down to shoppers. The closure of the Strait of Hormuz has caused disruption of fertiliser supplies, which are used to grow fruit and vegetables.
As a result, fertiliser prices have soared by around 80% since the beginning of the conflict. About a third of the world’s fertilisers normally pass through the Strait, according to the United Nations.
Mr Holsether also warned that reduced crop yields could lead to a bidding war for food, with interruption to supplies of fertiliser potentially putting up to 10 billion meals a week at risk globally. The poorest countries would be worst effected, he added.
“If there’s a bidding war on food and one that Europe is robust enough to handle, what we need to keep in mind in Europe is, OK, in that situation, who are we buying the food away from?” said Mr Holsether.
“That is a situation where the most vulnerable people pay the highest price for this in developing nations where they cannot afford to follow that.”
The Food and Drink Federation (FDF), which represents 12,000 food and drink manufacturers, has warned food inflation could reach 9% by the end of 2026. Separately, businesses have told the Bank of England that UK food inflation could reach 7%.
Earlier this month, Government officials drew up a worst-case scenario of potential food shortages, including chicken and pork, if supplies of carbon dioxide (CO2) become impacted.
CO2 is used in the slaughter of some animals. Ministers have been keen to stress there are no shortages yet.
In an update this week, Chancellor Rachel Reeves announced plans to suspend tariffs on selected food and drink to help people save money in the supermarkets.
Some of the items included are pasta, juices, tuna, oranges, peaches and other staples of the weekly shop. These products will have tariffs suspended until the end of 2028, covering over £2billion worth of imports into the UK.
A tariff is a tax imposed by a government on imported goods, which the cost normally passed on to consumers. The tariffs on some of the products included can range from 2% to 50% of the imported cost of the item. These will now be 0%.
However, any potential price reduction may not be immediate and depends on businesses passing the saving on to customers.
