This year has been marked by growing global uncertainty, which has been typified by the conflict in the Middle East, which has sent a significant shockwave through the costs of running a farm in the UK.

For businesses already operating under pressure, the additional burden is arriving at a particularly difficult moment.

The immediate impact on fuel and fertiliser

The closure and disruption of the Strait of Hormuz, through which a large proportion of global oil, gas and fertiliser trade flows, has had a direct and rapid effect on UK farm input prices.

Fertiliser prices are reported to have risen by approximately £50 per tonne above early 2025 levels and the situation remains volatile, with some traders suspending fixed-price quotes entirely as the market continues to move.

Red diesel has risen by around 60 per cent compared with the start of 2026, moving from approximately 63p per litre to over £1 per litre at its peak. Given the fragility of the current ceasefire, further increases cannot be ruled out.

This comes at a particularly unwelcome time for arable producers. Defra figures published earlier in 2026 estimated average arable farm income had fallen to around £17,000 in the year to February 2026, the lowest level since 2004.

The challenge for farm businesses

The core challenge is one that many farmers will recognise from previous periods of volatility. Costs rise faster than farm gate prices, which UK producers cannot control. There is no simple solution, but there are practical steps that farming businesses can take to limit the damage and plan more effectively.

Reviewing variable costs urgently is a sensible starting point. Identifying where reductions in input use are possible without materially affecting yield can make a meaningful difference and precision application technology can help target fertiliser and fuel use more efficiently where it is available.

Reducing cultivation intensity is worth considering on arable operations. Min-till or no-till approaches can cut fuel consumption significantly without necessarily sacrificing output.

Forward contracts and buying strategies should also be reviewed. Where inputs can be purchased ahead, taking positions when the market offers a degree of price certainty is worth considering, though current volatility makes this difficult to time.

Cash flow planning is particularly important right now. Higher input costs mean cash requirements are rising at the same time as margins are being squeezed. Reviewing overdraft limits and working capital facilities before a shortfall arises is far preferable to seeking finance under pressure.

Finally, it is worth considering whether any tax reliefs or loss relief claims are available if the business moves into loss. HMRC rules allow losses to be used in ways that can generate genuine cash recovery and taking professional advice early can make a real difference to the outcome.

The outlook

The duration and ultimate resolution of the Middle East conflict remain uncertain. UK crop prospects for 2026 are generally reported to be positive following a strong autumn and a reasonable start to the growing season, which provides some encouragement.

However, the NFU has warned that if fuel and fertiliser prices remain elevated, wider food price inflation is likely to follow, adding further uncertainty for businesses planning ahead.

If you would like to discuss how these pressures may affect your farming business, please get in touch with our ARA specialists.