Buying group’s index records extent of input price hikes

Farm input inflation in the year to the end of September rocketed by almost 22% overall, with further increases in fertiliser and fuel prices adding to the cost burden since then.

Put together by farmer buying group AF, the latest Aginflation Index shows five of the nine input classes recorded increases in double figures.

Fuel and fertiliser prices respectively rose by 79.9% and 51.2%, with no farming enterprise able to avoid double-digit inflation at the same time as the total food retail price index fell by 0.7% over the same period.

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The index is a weighted average of 130 items using data from the AF buying office, which spends more than £250m/year to source 10% of the UK’s farm inputs for its members.

Fertiliser prices have risen a further 50% since the end of the reporting period, mainly as a result of high gas prices, but also some logistics and other manufacturing cost pressures.

The gas price rise is due to a combination of factors nationally and globally, said Matt Kealey, head of AF crop production.

“Supply continues to struggle to keep pace with rising global demand. Stored gas levels are lower than normal in Europe because of last year’s cold winter. And as the UK has comparatively fewer storage facilities, we are more exposed to price fluctuations,” said Mr Kealey.

“This has added to speculation that Russia, a major gas supplier, is withholding output for political reasons, which, in turn, is fuelling price rises.”

Fuel rise continues

Fuel prices continue to rise on the back of a strong crude oil market as tight global energy supplies meet a strengthening demand from consumers.

The pressure on farm profits is being felt against the backdrop of international trade deals opening the way for more competitors to the UK market, “greenflation” (from the progress to a zero-carbon economy) and just-in-time supply chains buckling under the pressure from a global economy recovering from its dormant state, said AF.

Its chief executive, David Horton Fawkes, said the extraordinary financial pressures facing farmers threatened the very existence of many farms. 

“We are deeply concerned about the effect of these high rates of agricultural inflation on our members, and there has never been a stronger case or a better time for UK farmers to collaborate and work together.”