Farming News - Op-ed: Iran, oil and the input cost squeeze UK growers aren't prepared for
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Op-ed: Iran, oil and the input cost squeeze UK growers aren't prepared for
Budgeting inputs for harvest 2027. Tom Tapp - Sales Trader in Soft and Agricultural Commodity Derivatives at Attara
Harvest season is a natural time to reflect on the year behind and start planning for the one ahead, and after the volatility of 2025-2026, there's plenty to reflect on.
A hot, dry spring pushed yields below average across much of the country. Barley was hit hardest, with UK production down around 10% year-on-year in 2025, and wheat, oats and other crops all feeling the strain. Some farms weathered it reasonably well. Others were hit hard.
Margins have been squeezed from both directions. Grain prices stayed relatively low despite difficult growing conditions, while fertiliser costs remain exposed to global shocks, with around 60% of UK fertiliser needs still being met by imports. And with cautious consumer spending, pushing retailers to cut shelf prices, that pressure has inevitably been passed back down the supply chain to producers.
Weather, global grain markets, and retailer pricing decisions are all beyond your control. But one major input cost doesn’t have to be: fuel.
How do you budget?
For many agricultural businesses, budgeting comes down to last year's average; or the average of the two years before that. It's a common approach, but it fails to price in unexpected events.
Red diesel nearly doubled in the space of four months between December 2025 and April 2026.
Historical averages simply cannot account for geopolitical shocks, export restrictions, or sudden policy changes, and a budget that does not factor in market volatility can leave you exposed to unexpected costs before harvest season begins.
Do you hold back cash reserves to cover the difference if fuel spikes? If not, that exposure sits directly on your margins; particularly at a time when weather uncertainty and fertiliser costs are already doing the same.
Fixing your fuel cost through hedging removes that uncertainty. You know exactly what you're paying, and you can focus on the important stuff.
A more predictable way to manage fuel costs
Hedging lets you take fuel price risk off the table, without changing anything about how – or from whom – you buy your diesel.
You continue purchasing red diesel through your existing supplier, exactly as you do today.
Each month, if the Platts benchmark is above your agreed price, the difference is covered. If it falls below, you pay the difference. Either way, your effective fuel cost is fixed.
Cover can be structured across a full season and beyond – from the 2027 harvest ahead to 2029 – and tailored to match your actual seasonal usage, so you're only ever hedging what you genuinely need to buy.
When you can’t control the weather, grain markets, or market prices, securing certainty on one of your largest controllable costs is a straightforward way to protect your margins and manage cash flow.
Harvest season is a natural time to reflect on the year behind and start planning for the one ahead, and after the volatility of 2025-2026, there's plenty to reflect on.
A hot, dry spring pushed yields below average across much of the country. Barley was hit hardest, with UK production down around 10% year-on-year in 2025, and wheat, oats and other crops all feeling the strain. Some farms weathered it reasonably well. Others were hit hard.
Margins have been squeezed from both directions. Grain prices stayed relatively low despite difficult growing conditions, while fertiliser costs remain exposed to global shocks, with around 60% of UK fertiliser needs still being met by imports. And with cautious consumer spending, pushing retailers to cut shelf prices, that pressure has inevitably been passed back down the supply chain to producers.
Weather, global grain markets, and retailer pricing decisions are all beyond your control. But one major input cost doesn’t have to be: fuel.
How do you budget?
For many agricultural businesses, budgeting comes down to last year's average; or the average of the two years before that. It's a common approach, but it fails to price in unexpected events.
Red diesel nearly doubled in the space of four months between December 2025 and April 2026.
Historical averages simply cannot account for geopolitical shocks, export restrictions, or sudden policy changes, and a budget that does not factor in market volatility can leave you exposed to unexpected costs before harvest season begins.
Do you hold back cash reserves to cover the difference if fuel spikes? If not, that exposure sits directly on your margins; particularly at a time when weather uncertainty and fertiliser costs are already doing the same.
Fixing your fuel cost through hedging removes that uncertainty. You know exactly what you're paying, and you can focus on the important stuff.
A more predictable way to manage fuel costs
Hedging lets you take fuel price risk off the table, without changing anything about how – or from whom – you buy your diesel.
Here's how it works:
A hedge runs alongside this as a monthly-settled swap, locking in a fixed price agreed at the outset.
Cover can be structured across a full season and beyond – from the 2027 harvest ahead to 2029 – and tailored to match your actual seasonal usage, so you're only ever hedging what you genuinely need to buy.
When you can’t control the weather, grain markets, or market prices, securing certainty on one of your largest controllable costs is a straightforward way to protect your margins and manage cash flow.