RED DIESEL prices are falling back from historic highs, but soaring gas costs are still hitting intensive farmers.
Agricultural diesel prices have fallen 10% in recent weeks, to hover between 25-28p/litre, although reports from Wales claim some suppliers are charging up to 35p/litre. Kerosene is now just a fraction cheaper, at 23-26p/litre.
John Griffith, chief executive of supply co-op ACT, said that the peak in oil prices had probably occurred in the last week of October, when Brent crude went well beyond the $50/barrel mark.
“Fuel prices have softened a bit because the oil price has softened. The trend is probably to ease a little,” he said.
The Federation of Petroleum Suppliers has predicted that fuel prices will remain static, unless a bout of very cold weather pushes up demand in northern Europe.
But prices are still well above the levels seen at the start of the year and Jonathan Pettit in the NFU‘s policy services department believed they would continue to inch up.
“What we‘ve seen in the last six months is a problem with supply. It will have a severe impact on costs and profitability, but this is largely out of the hands of us and the oil companies.”
Intensive livestock farmers and horticulturalists have also been hit by rocketing gas prices, and are struggling to pass the cost on to their customers.
Forward gas prices are pushing 35-40p/therm in the New Year, which is up to a twofold increase on the same period last year.
James Hook, head of Oxford-based chicken hatchery PD Hook , has so far swallowed the rising cost of gas, but he is negotiating with customers.
“We use gas to brood our chicks, and our biggest problem is whether or not we can pass it on to customers. The scale is enormous, as we‘re losing £thousands per crop,” he said.
Ofgem, the gas and electricity regulator, has estimated that Britons will pay a £1.4bn gas premium this winter, and has launched an inquiry into why cheaper gas has not reached the marketplace from Europe and the North Sea.