Fuel cost rise sees input inflation jump more than 6%

A jump of more than 40% in fuel costs has pushed the weighted average cost of farm inputs up by more than 6% in six months.

Buying group Anglia Farmers’ twice yearly AgInflation index shows seed, animal feed and labour with the next highest increases

The overall rise is in contrast to a fall of 1.14% for the year to September 2016.

Consultants have been warning for months of the likelihood of significant cost creep this year as the medium term impact of the low value of sterling feeds through to machinery prices in particular.

See also: Rising input costs will threaten farm businesses this year

The figures are also in contrast to the rise in the retail price index which rose 0.6% between September 2016 and February 2017.

The biggest farm production costs were for cereals and oilseed rape, where production cost inflation of 4.81% compares with a 4.4% deflation in the cost of bread and margarine over the same period.

Sugar beet production costs have increased 3.55% compared with a 9.8% increase in the retail price of granulated sugar.

AF sources more than £230m of farm inputs a year.

To calculate the AF AgInflation Index, expenditure is weighted across nine cost centres and 132 cost items.

Weightings within and between cost centres are based on average farm and grower expenditure.

Earlier this year AF forecast the AgInflation rate would rise to 9.5% for 2017 as a whole.