Middle East tensions push farming towards crisis, warns NFU Scotland

Farming is being pushed towards crisis as escalating tensions in the Middle East drive a surge in energy and fertiliser costs, with NFU Scotland warning urgent government action is needed to protect domestic food production.

The union said disruption to the Strait of Hormuz has sent shockwaves through global energy markets, pushing oil prices above $110 a barrel — among the highest levels in recent years — and triggering sharp increases in fertiliser costs.

Fuel and fertiliser are critical to agricultural output. NFU Scotland said the impact is already being felt on the ground, with farmers and crofters facing mounting financial pressure and increasingly difficult decisions over input use and investment.

New industry data suggests those pressures are intensifying. According to Andersons, agricultural input inflation — known as ‘agflation’ — reached 7.6% annually in March 2026, well above general inflation at 3.0% and food inflation at 3.2%.

At the same time, farm output prices have fallen by 6.5% year-on-year, leaving producers caught in what analysts describe as a “cost of farming” squeeze, with rising expenses colliding with weakening returns.

Agflation is now increasing at its fastest rate since early 2022. While still below the peaks seen following the Ukraine invasion, disruption linked to the Iran conflict — particularly around the Strait of Hormuz, which handles around 20% of global oil and gas flows — continues to push input costs higher.

Pressure is also mounting on the government over fertiliser supply, with industry leaders warning of growing risks to farm cashflow and future food security.

The Agricultural Industries Confederation (AIC) has written to Defra outlining key concerns around access to finance, data transparency, carbon policy and sanctions, all of which are already influencing farmer purchasing decisions ahead of the next season.

It said tightening credit conditions are adding further strain, with some producers facing difficulties securing finance for fertiliser purchases, raising concerns over market stability and supply continuity.

NFU Scotland warned the situation could lead to reduced domestic output, rising food prices and increased farm business failure if support is not introduced, raising wider concerns over UK food security.

President Andrew Connon said the crisis is already affecting producers. “This is not a distant geopolitical issue – it is already hitting farm businesses across Scotland hard,” he said.

He added that many farms are reaching a tipping point. “Farmers cannot absorb these unprecedented cost increases indefinitely. Without urgent government intervention, we will see a contraction in food production, with consequences for consumers and the wider economy.”

The warning comes as several European countries have already stepped in with support, including fuel subsidies, fertiliser assistance and tax relief. No equivalent package has yet been confirmed in the UK.

NFU Scotland is calling on both the UK and Scottish governments to respond quickly with a targeted package of support to stabilise the sector.

This includes measures to offset exceptional fuel and fertiliser costs, extend energy cost relief to agriculture — particularly for horticulture and intensive livestock sectors — and improve transparency in fertiliser and fuel pricing.

The organisation also wants safeguards to ensure continuity of supply in the event of shortages, and for agriculture to be prioritised in any future fuel rationing scenario.

Alongside immediate intervention, it said longer-term resilience must be strengthened to reduce exposure to future shocks.

Proposals include developing a UK fertiliser security strategy, increasing investment in on-farm efficiency and nutrient management, and strengthening fairness in supply chains so farmers are better able to recover rising costs.

NFU Scotland also argued that food production should be formally recognised as part of the UK’s critical national infrastructure, reflecting its strategic importance to national resilience.

The union has written to the Prime Minister outlining its concerns and is awaiting a response. Defra is expected to reply on behalf of No.10, while a request for a ministerial meeting is under consideration.

Connon said the situation represents a pivotal moment. “The cost of intervention today is far lower than the economic and political cost of inaction tomorrow,” he said.

“This is about food security, affordability and resilience. Government must act decisively to support domestic production and give confidence to farmers, crofters and growers.”

With costs continuing to rise and no support package yet in place, the warning is clear: without intervention, UK food production could begin to contract.