What the current Middle East crisis could mean for Scottish agriculture

From the war in Ukraine to disruption in global supply chains, geopolitics has increasingly shaped the costs of producing food.

The current crisis in the Middle East risks becoming another such moment. While the headlines understandably focus on the humanitarian and security dimensions of the conflict, the implications for global energy and fertiliser markets are already beginning to emerge. For Scottish agriculture - an industry heavily reliant on imported inputs - those shifts could have real consequences for farm businesses in the months ahead.

The reality is that a significant proportion of global fertiliser production and key raw materials originate in, or moves through, the Middle East. Countries such as Qatar and Saudi Arabia are major exporters of urea and other fertiliser feedstocks, while critical shipping routes in the region carry large volumes of nitrogen and phosphate

products to global markets.

If conflict disrupts production, shipping routes, or insurance costs for vessels moving

through the region, fertiliser markets will respond quickly - as we have seen many

times before.

Another reality is that Scotland, and the rest of the UK, relies on imports for most

fertilisers used on farms. When global markets tighten, the costs for Scottish farmers

invariably soar.

For context, Scottish agriculture uses around 250,000 to 300,000 tonnes of nitrogen

fertiliser each year, the majority of which supports grassland and cereal production.

Even relatively small movements in global fertiliser prices can therefore translate into

very significant cost increases across the sectors – and directly impact on many

farms and crofts.

The other key factor is energy.

Nitrogen fertiliser is produced using natural gas, meaning fertiliser markets are

closely tied to global energy prices. Any disruption that pushes up gas or oil prices

feeds directly into farm input costs.

That matters not only for fertiliser, but also for red diesel, which underpins day-to-day

farm operations. Across Scotland, arable farms rely heavily on fuel during cultivation,

drilling and harvest, and livestock farms depend on fuel for feed handling, bedding,

and winter operations, while contractors, hauliers and processors all face higher

costs when energy prices rise.

When fuel costs spike, those increases ripple through the entire supply chain.

Unfortunately, this is nothing new. Scotland’s farmers and crofters will remember only

too well the fertiliser crisis following the invasion of Ukraine in 2022. Nitrogen

fertiliser prices rose dramatically, readily exceeding £800 per tonne and forcing many

to reconsider cropping plans and fertiliser strategies. Some reduced nitrogen

applications, others switched crops, and many absorbed significant financial

pressure simply to keep producing – all in an effort to remain viable. While markets

have stabilised somewhat since then, the current geopolitical tensions highlight how

fragile that stability remains.

We should be in no doubt that current conflict and political tensions are likely to lead

to higher fertiliser and fuel costs across Scottish agriculture.

Arable producers, particularly in the east of Scotland - from Berwickshire through

Angus and into Aberdeenshire - are among the most fertiliser-intensive systems in

the country. Crops such as winter wheat, barley and oilseed rape depend on

significant nitrogen inputs to achieve viable yields.

As a result, fertiliser can represent between 30 and 40 percent of variable costs in

arable production. When fertiliser prices rise sharply, margins are quickly squeezed –

especially given the poor outprices cereals and oilseeds growers have endured over

recent years.

Livestock farms, meanwhile, are not immune. Grass growth, and therefore forage

production, depends heavily on nitrogen fertiliser. Higher fertiliser costs can reduce

grass utilisation, increase reliance on purchased feed, and ultimately raise the cost

of producing beef, lamb and milk. In upland and hill systems, where margins are

almost permanently tight, additional input costs can place real pressure on farm and

croft viability.

It is also important to remember that farm input costs do not exist in isolation. Higher

fertiliser and fuel costs affect not only crop production and feed prices, but also

transport, logistics, and food processing. If these issues persist, both local and global

cost inflation will translate into higher supermarket prices - putting pressure on

household budgets, reducing spending power in the wider economy, and potentially

creating domestic political pressures.

One of the clear lessons of the past few years is that volatility in global markets is

becoming more frequent.

That makes resilience increasingly important. On farm, many producers are already

taking steps to improve nutrient efficiency - through soil testing, precision

applications, organic manures and slurry, and better grassland management.

But there are also wider policy questions.

If fertiliser and energy are strategically critical inputs for food production, then

governments must consider how best to support secure supply chains and reduce

exposure to global shocks. That includes thinking about energy security, domestic

food production capacity, and the long-term resilience of agricultural systems.

There is no escaping the fact that Scottish agriculture is deeply connected to the

wider world. We export high-quality food to global markets, but we also rely on global

supply chains for many of the inputs that make that production possible. Ensuring

security in the fertiliser supply chain is a critical component of national food security.

Events in the Middle East may feel distant from farms in East Lothian, Ayrshire or the

Highlands. Yet time and again history shows that geopolitical tensions can quickly

translate into higher costs at the farmgate.

At a time when Scotland’s farmers and crofters are already navigating tight margins,

significant changes to policy and support payments, and economic and market

volatility, these developments serve as another reminder of the importance of

building a resilient and sustainable food production system here in Scotland – and of

the shared responsibilities of the agricultural industry, the supply chain, and

governments.

In response to the developing situation, NFU Scotland has written to the Prime

Minister raising concerns about rising input costs and urging the UK Government to

consider measures that could help stabilise fertiliser and fuel markets and protect

domestic food production.

ENDS