How could strait of Hormuz closure affect UK food and medicine supplies?

Food

“All bets are off,” said Prof Tim Lang from City St George’s, University of London. He is one of the world’s food supply chain experts and has written numerous reports on food security, which he said have largely been ignored by successive governments.

“Britain, and the rest of the world, has not seen what a medium-term impact of a massive shock to the world energy system is,” he said. A sharp hike in fossil fuel prices has huge impacts even in the short term to food supplies, as fuel is used to transport food, and the inputs such as fertiliser used to grow vegetables are made from fossil fuels. Greenhouses and chicken barns are heated with gas.

“There are some sober industry analyses beginning to come out which say food price inflation in England will double,” Lang said. That is baked in as the costs of food production have already risen so sharply; if the war carries on much longer, this high rate of inflation will be sustained, and could rise further.

Organic food will face less of a price shock, he added, because it requires fewer of these now expensive inputs.

The farming sector says that producers of salad vegetables and dairy are already running into problems.

Dairy production has taken a hit as dairy farmers buy fertiliser when they need it because of cash and storage constraints, but often it is around this time as pastures emerge from winter and into the main spring grass-growing season.

The National Farmers’ Union president, Tom Bradshaw, said: “Disruption to global oil and gas markets is already putting UK farm businesses under immense pressure, which will only grow the longer the disruption continues.

“Arable, livestock and dairy farmers are having to shoulder increased costs of fuel and fertiliser, often only being made aware of the price they will pay once products have been delivered on to farm. Meanwhile, horticulture businesses face a double whammy with the surging cost of heating glasshouses, combined with large increases to their standing charges for energy use.”

In terms of Iranian imports, the supply of pistachios and saffron is already facing a jolt, the former government food adviser Henry Dimbleby said. “For saffron, Iran produces [approximately] 85-90% of the world’s supply,” he added. “Iran is the world’s largest exporter of pistachio kernels ([about] 70% of global kernel exports), and 20% of nuts.”

Medicines

“Currently, we’ve not got any hard evidence of medicine shortages as a result of the conflict,” said Gareth Thomas, the director of policy at the National Pharmacy Association, but he added: “We are seeing quite a lot of price increases, which can be a sign of disruption in the medicine supply chain.”

These price hikes are absorbed by the NHS, and don’t transfer to consumers directly. “We’d encourage to keep requesting medicines in the usual way,” he said.

Iran does not manufacture many medicines, but the sector is affected by the war through rising energy costs as well as transport links between leading pharmaceutical-manufacturing countries such as India and China, and countries that import most medicines, such as the UK. This is because ships are unable to pass through the strait of Hormuz, and reduced travel through the Middle East’s hub airports is affecting air freight.

David Weeks, the director of supply chain risk management at the analytics group Moody’s, said: “The shortages affecting the drugs themselves, not the packaging, are being driven by delays in the transit of petrochemical precursors used to produce active pharmaceutical ingredients (APIs), and in some cases by production being halted entirely.”

Most European countries, including the UK, hold medicine stockpiles to last up to six months, says Constantin Blome from Stockholm School of Economics. Photograph: Julien Behal/PA

But not much would change over the next fortnight, added Constantin Blome, a leading supply chain researcher based at the Stockholm School of Economics. “The strait of Hormuz is not the Suez canal,” he said.

He noted that manufacturers usually held eight weeks of buffer stocks, while most European countries – including the UK – held stockpiles intended to last up to six months, unlike some African countries, which will be worse affected.

Prof Liz Breen, who researches pharmaceutical supply chains at the University of Bradford, said: “Prices may be rising purely based on speculation of shortages (opportunism) and panicking, which is the normal response.”

Breen noted that 85% of medicines prescribed in the UK were generics, which the UK relies on India and China to supply. “This does make us vulnerable once disruptions occur,” she said.

The medicines most likely to be affected include vaccines, insulin, biologics with living materials that require cold storage, and cancer therapies, because of short shelf lives and transport challenges, as well as petroleum-based products such as aspirin and paracetamol, according to Breen.

Food

Supply shortages of pork, chicken and fresh fruit and vegetables could hit within months, Lang warned. He said: “Horticulture is likely, poultry, pigs, animals which are kept in intensive closed systems so they’re indoors and kept warm and fed by automatic systems; they are fed using big commodities. If not shortages, we might see hiccups.”

Because of the cost of heating greenhouses, “there will be horticulturalists who do not plant”, he said. “We know costs will go through the roof if they are using greenhouses. The very big horticultural firms will turn to their suppliers in north Africa and west Africa but they will be hit too by fuel costs.”

The British Tomato Growers’ Association has said that, in six weeks or so, shoppers could see an increase in the price of tomatoes, peppers and cucumbers, as a result of rising costs of heating glasshouses with gas.

Medicines

In the short term, Breen said, manufacturers and wholesalers in the UK can move stock around to plug gaps, while pharmacies can transfer among each other to support the needs of their local populations, as was the case during the Covid pandemic.

The Department of Health and Social Care can put serious-shortages protocols in place to ration quantities of vulnerable stock, she added.

Thomas anticipated further price hikes, though this was “impossible to predict”, and certain medical conditions may be more affected than others. “Every player in the supply chain is doing everything to mitigate the risks here, so what manufacturers will be doing is looking for alternative routes to get medicines,” he said.

He noted that one challenge faced by pharmacists is that they are prevented by law from amending prescriptions to a clinical alternative – for example, substituting 20mg for two 10mg pills. “We’ve been asking the government for years to change those laws,” he said.

Container ships and tankers in the strait of Hormuz in February, before the conflict. Photograph: Giuseppe Cacace/AFP/Getty Images

Food

The grain supply chain would be hit by autumn, Lang said. “The growers paid for their inputs before the war, so the impacts of forward planning will hit in October, when it is time to pay for fertiliser again.”

Dimbleby said: “This will hit autumn crops – winter wheat, winter barley, oilseed rape – reaching shops in spring/summer 2027. Fertiliser for those plantings will be materially more expensive.”

Lang warned that the longer the conflict went on, with higher inflation rates and spiralling food costs, the more that food inequality would be entrenched in society. “People on low incomes are the worst-hit already. Britain is a very rich country but is totally divided, with low food security. We have one in six households already food insecure, meaning parents are on occasion going without food to make ends meet.”

The price of highly processed foods, which are often cheaper and purchased by poorer households, may rise as they require more inputs to produce, which are getting more expensive.

Some countries that are better prepared for shocks to the system will see fewer negative impacts, Lang predicted, adding that the Swiss government, for example, has a three-month stockpile of food, and the Chinese government “has been buying and stockpiling food like mad for a number of years”. The British government has no food stockpile, and supermarket shelves hold three days’ worth of food on average.

Lang said: “The political question is why is the government focusing rightly on energy costs but nothing about food, when food is just as important?”

Medicines

Breen said that if the conflict stretched into the longer term, she would expect the health department to work with existing suppliers to source additional supplies that travel to the UK via different routes, or to find new suppliers, as they did during shortages of hormone replacement therapy products.

The department might also determine if it is necessary to switch to alternatives and communicate this to healthcare professionals, she added.

Blome said he expected a longer-term conflict to result in some tankers being let through the strait, but for Iran to charge higher prices for passage. “Most oil and gas issues translate to price spikes rather than stockouts, unless transport capacity is impacted,” he said.

He thought that western countries should learn from situations such as this and diversify their supply chains. They are discouraged from doing so because it is expensive and time-consuming to accredit multiple suppliers that comply with medical regulations and offer sufficient quality.

“It’s only during crisis that governments seem to discuss it, but it’s crazy how fast we forget about the impact generated by these different crises,” he said.

Thomas noted that after big disruptions, “it may take many months for the system to fully recover and stocks to be re-established”.

He said more expensive branded medicines would have more resilient supply chains. “The NHS pays less than a pound for more medicines, less than most equivalent countries in the world, so we’re getting the cheapest possible medicines. In a crisis like this, if the UK pays the lowest price and there’s a shortage, we’re the least likely to get a hold of that medicine.”