FAQs: Iran Conflict and UK Agri-Supply Chains

Although UK agriculture is not directly dependent on Iran, it operates within a highly interconnected global supply system. Impacts and shocks in one part of the world frequently have consequences felt across the UK, both directly and indirectly. This is particularly true where energy is concerned.

Events affecting energy‑producing regions can influence energy prices, shipping routes and global trade flows, which in turn affect the manufacture, movement and cost of agricultural inputs.

As energy is a critical input for fertilisers, crop protection products, packaging and transport, geopolitical instability in energy markets can have indirect but meaningful consequences for UK agriculture and food supply chains.

UK agri‑supply chains rely on multiple global shipping routes linking Asia and the Americas to Europe. These routes support the movement of key materials such as feed ingredients (e.g. soya and palm‑based derivatives), fertiliser inputs, crop protection product components and associated packaging materials.

Disruption to any major route can increase costs, extend lead times and create knock‑on effects elsewhere in the system, even if the UK is not directly sourcing from the affected region.

The current risk is best understood as a combination of both.

Global trade systems are sensitive to shocks. When disruption occurs, some countries may restrict exports or divert supplies to protect domestic needs. These actions can amplify volatility elsewhere, even where there is no initial shortage.

Recent export controls imposed by China on products such as urea and hydrochloric acid illustrate this dynamic. They highlight how supply routes that appear broadly stable under normal conditions can lack resilience when pressures increase.

Once disrupted, the effects can spread quickly, tightening supply and increasing volatility, with impacts felt further along the supply chain than might initially be anticipated.

For import‑dependent sectors, any disruption to shipping logistics can have an immediate effect. Freight and energy costs can become volatile very quickly, particularly where fuel costs increase.

Secondary impacts include higher shipping and transport costs, alongside ancillary costs such as marine insurance, all of which can affect trade viability for both imports and exports.

There are currently no verified indications of disruption for feed commodities, nor for high‑value, low‑volume inputs such as vitamins and amino acids.

Plant protection products for the spring 2026 season were already in the UK when the war started, and availability was therefore not affected.

A key pressure is the relationship between the cost of agricultural inputs and the value of outputs. If input costs continue to rise faster than output prices, growers may begin to question the financial viability of planting certain crops, particularly looking ahead to autumn 2026 if the war shows no signs of ending. This pressure is intensified by a reduction in payments under the Sustainable Farming Incentive (SFI).

Energy markets play a central role in this dynamic. Changes in energy costs feed through over time into fertilisers, crop protection products, packaging and transport, gradually increasing overall input costs across the supply chain.

Many agricultural input markets operate on long planning cycles. For plant protection products, demand is very seasonal, with around two‑thirds used in the spring and around half used in the autumn. Planning typically takes place 18–24 months ahead of the season, with plans finalised around six months in advance of the season.

As a result, the timing of disruption is critical. In some cases, impacts can be felt immediately; in others, the effects may take several months to become apparent. Import‑dependent sectors may also experience longer lead times if shipping routes need to be diverted to more secure alternatives.

The feed sector would be concerned with any escalation that takes in a wider geography, for instance the Gulf of Aden, and any impact on marine traffic through the Suez Canal.

If the war continues beyond autumn, there may be issues with the availability of shipping containers to move plant protection products (PPPs) into the UK, as well as reduced availability of plastics used in PPP container manufacture.

Prolonged disruption to oil supply could eventually impact PPP manufacture and the availability of plastic PPP containers. China may also, if concerned about domestic production, reduce exports of PPP constituents.

Markets are already shifting from a ‘just in time’ approach to a ‘just in case’ approach. While this can improve resilience, it creates pressures across seasonal agricultural production systems.

This shift has implications for stockholding, warehousing capacity, the management of short shelf‑life materials and, critically, cash flow and working capital.

Those ingredients that are not grown or produced in the UK, and therefore have to be imported, are more exposed. For feed materials, these include maize, soyabean meal, sunflower meal, palm‑based products and molasses, to name a few.

The UK is 100% import‑reliant for some classes of feed additives, such as vitamins and amino acids. These are, arguably, of greater strategic importance than the macro materials listed above.

Fuel and freight charges are an important component of feed import costs, but they do not usually have a dramatic impact on raw material prices. The greater impact is seen in increased fuel costs associated with the delivery of feed to farms.

Feed supply chains have generally proved resilient when faced with short‑term disruption. Businesses have learned to adapt and remain flexible, with lessons taken on board from COVID‑19, the war in Ukraine and Brexit.

However, there is little room for complacency, as each event brings different challenges.

Constituents of plant protection products (PPPs) are sourced globally, including from China and India, ahead of formulation and packaging in locations such as Europe and the USA. Each stage of transport adds cost to the final product.

Formulation cannot be changed without regulatory approval, as PPPs are formulated to deliver maximum efficacy while maintaining stability and safety. Transport is therefore more likely to be affected, both through increased costs and potential delays, depending on global supply and demand for active ingredients.

Petrochemicals and energy are used in the manufacture of active ingredients, co‑formulants and plastic packaging for plant protection products (PPPs).

Although the UK does not import significant volumes of nitrogen fertiliser directly from the Middle East, the region, particularly the Gulf Cooperation Council (GCC) states, is a structural pillar of global nitrogen supply and therefore highly influential in shaping global market conditions.

The GCC’s importance stems primarily from its access to abundant, low‑cost natural gas, which provides a durable competitive advantage in ammonia production. Ammonia is the foundational building block for all mineral nitrogen fertilisers, including urea, ammonium nitrate (AN) and urea ammonium nitrate (UAN). As a result, any disruption affecting gas supply or fertiliser production in the Gulf has immediate knock‑on effects across international nitrogen markets.

The Middle East also acts as a swing supplier to the world’s largest fertiliser‑consuming regions, notably India, China and South and Southeast Asia. These markets absorb the majority of Gulf exports and can rapidly redirect demand when supply tightens, reshaping global trade flows and price dynamics.

While the Gulf Cooperation Council (GCC) accounts for a relatively modest share of total global nitrogen fertiliser production, its influence on internationally traded markets is disproportionately large. The region is estimated to supply around one‑quarter to one‑third of global seaborne urea exports, alongside a material share of internationally traded ammonia.

This concentration means that disruption affecting the GCC, whether arising from gas supply constraints, geopolitical tension or shipping disruptions, can have an outsized impact on global fertiliser availability and prices, including in countries such as the UK, even where direct imports from the region are limited.

Natural gas plays a central role in nitrogen fertiliser production:

• It is the primary feedstock for ammonia synthesis via the Haber–Bosch process.

• It represents the single largest cost component in ammonia manufacture.

• Movements in gas prices therefore translate rapidly into ammonia prices and, by extension, into the prices of urea, ammonium nitrate (AN) and urea ammonium nitrate (UAN).

Where gas prices rise due to conflict, liquefied natural gas (LNG) diversion, pipeline disruption or broader energy market volatility, fertiliser prices tend to adjust almost immediately. This close linkage explains why nitrogen fertiliser markets often respond sharply to geopolitical events even before any physical supply disruption occurs.

Some nitrogen fertilisers are structurally more exposed than others to energy and shipping disruption.

Urea

• Highly exposed to natural gas costs and long‑distance shipping routes.

• Global production is relatively concentrated, increasing sensitivity to supply shocks.

Ammonium nitrate (AN) and urea ammonium nitrate (UAN)

• Gas‑based ammonium nitrate production in Europe is increasingly marginal and, in some cases, uneconomic, leading to contraction of the production base.

• The UK’s remaining ammonium nitrate manufacture relies entirely on imported ammonia, meaning so‑called “domestic” production does not insulate these products from global gas and ammonia price movements.

• When urea supply tightens or prices rise sharply, buyers often substitute into AN or UAN, pulling prices higher across all nitrogen products even where physical availability has not changed.

Ammonia

• Extremely energy‑intensive and directly linked to gas availability.

• Frequently traded internationally as an intermediate product, increasing exposure to freight, port and shipping risks.

Current discussion across the fertiliser sector encompasses both supply continuity and market conditions, although the balance of concern differs.

• Supply continuity risks relate to shipping routes, contract performance, port operations and the risk of force majeure where gas or liquefied natural gas (LNG) supplies fail to materialise.

• Market conditions are currently more acute, with gas price volatility driving rapid price movements, reduced market liquidity and suppliers frequently withdrawing prices during periods of uncertainty rather than offering firm forward cover.

At present, the risk to the UK is less about immediate physical shortage and more about availability at viable prices, particularly during periods of peak seasonal demand.

From an agronomic perspective, delayed fertiliser application can have material consequences even where overall availability is ultimately maintained:

• Yield potential: Nitrogen applied after key crop growth stages cannot fully recover lost yield, particularly in cereals.

• Nitrogen use efficiency (NUE): Late application increases the risk of losses through volatilisation, leaching and denitrification.

• Crop quality: Timing is critical for grain protein formation, particularly in milling wheat; delays can compromise end‑use quality.

• Operational pressure: Delayed purchasing concentrates demand into shorter windows, increasing pressure on logistics, spreading capacity and farm labour.

These factors underline why fertiliser disruption is not solely an economic issue: timing is as critical as total nutrient availability.

The UK fertiliser market is structurally more exposed to global disruption than most major agricultural economies.

Near‑total import dependency
The UK imports virtually 100% of its nitrogen fertiliser requirement, either as finished product (urea, ammonium nitrate and urea ammonium nitrate) or as intermediate materials used in domestic manufacture. Around 45% of nitrogen imports now originate from non‑EU sources, increasing exposure to global trade and geopolitical risk.

No domestic ammonia synthesis
The UK no longer synthesises ammonia, the essential feedstock for all mineral nitrogen fertilisers. Although some ammonium nitrate is manufactured domestically, it relies entirely on imported ammonia, meaning production costs and availability are fully anchored to global gas and ammonia markets.

Requirement for continuous production
Nitrogen fertiliser production is capital‑intensive and continuous, with plants designed to operate 24/7. Production, import scheduling and ordering must remain broadly continuous throughout the year to meet agricultural demand. Where demand signals weaken or orders are delayed, output may be reduced or suspended, and capacity is not easily reinstated.

Risk of production hiatus and demand destruction
Delayed or cancelled orders do not simply defer supply; they can trigger production hiatuses, tighter availability and higher replacement costs later in the season. Prolonged disruption or price volatility can also lead to demand destruction, as growers reduce application rates or alter cropping decisions, with downstream impacts on yields, quality and food production.

Limited buffering capacity
Unlike phosphate and potash, nitrogen is poorly buffered in agricultural systems and must be supplied every year. Regulatory constraints, including Control of Major Accident Hazards (COMAH) storage limits, restrict the ability to hold large strategic stocks, reducing the UK’s capacity to absorb short‑term global shocks.

Result: the UK is effectively a global price taker with minimal physical or economic insulation. Disruption to gas markets, ammonia supply, fertiliser production continuity or international trade flows therefore feeds rapidly into UK availability, prices and agronomic risk.