Fuel price drop keeps lid on production costs

A 19% drop in fuel prices has contributed to an overall drop in farm input costs of 1% in the six months to the end of January.

The latest AF AgInflation Index figures from Anglia Farmers show fertiliser, contract, hire and labour costs have increased, adding to the squeeze caused by lower output prices at the farm gate.

See also: Cashflow pressure keeps farm fertiliser orders slow

Figures by enterprise show that production costs have fallen for all cropping, with potato production costs down by 2.23%, combinable crops by almost 1% and sugar beet by 1.83%.

Livestock production costs remained broadly level – while feed costs came down on the back of lower grain prices, the price of animal health products and vets has fell by just 0.2%. Milk production costs were down because of lower feed prices, while the Retail Price Index fell by just 0.2% in the same period.

“The reality is that prices at the farm gate are down even further, resulting in a major squeeze for the industry,” said AF chief executive Clarke Willis. Fuel prices were rising again, but could be fixed forward for up to two years, he said.

The AF AgInflation Index was launched in 2006.