Relief for farmers as rising cost of inputs halted

Fuel and fertiliser costs are among only a handful of inputs that have seen significant price rises in the past 12 months, bringing some relief to farmers who have suffered crippling falls in the value of crops and cattle.

Agricultural input prices have increased by just 0.57%, according to the annual AgInflation Index figures produced by Norfolk-based buying group AF for 12 months up to September 2019.

Fertiliser costs rose by 7.2% during the year and machinery running costs, including depreciation, also increased, with a 7.8% hike recorded as companies passed on increased energy prices.

See also: Ag inflation driven up by fuel, fertiliser and feed price hikes

However, there was some relief for the arable sector, with seed prices falling by 22.7%, dragging down the average inflation figure.

The drop was a return to more normal seed prices following a spike in production costs during 2018 caused by extreme weather.

AF Group chief executive Jon Duffy said the relative stability in input prices was welcome after the three previous reports all recorded an inflation increase of more than 4.5%.

“After the volatility and unavailability experienced in 2018, these figures are a welcome breath of fresh air,” said Mr Duffy.

“It’s important to remember that while many inputs have eased from recent highs, figures are still significantly higher than they were just a few years ago,” he added.

Compared with a base year in 2006, AF Group data showed some inputs had doubled in costs such as fuel, fertiliser and animal feed and medicine.

Changes in input costs by type

Input type Change in input cost 2018-2019 (%) Index change 2006 = 100
Seed -22.7 161
Fertiliser 7.2 205
Chemicals -0.2 122
Animal feed and medicine -2.8 222
Contract and hire -2.1 131
Machinery inc depreciation 7.8 173
Fuel 1.7 199
Labour 3.7 127
Rent, interest, property -1.2 140

 The group also calculated how inflation had affected each farming sector.

From the data, the dairy and sugar beet sectors fared worst, with cost increases of 1.77% and 1.73%, respectively.

Cereal and oilseed rape growers saw the lowest overall inflation figures at 0.62%, benefiting from the drop in seed prices. 

Inflation by sector 2018-2019

Sector Input inflation figure (%)
Cereals and OSR 0.62
Potatoes 1.55
Sugar beet 1.77
Dairy  1.73
Beef and lamb 0.79
Overall Ag Inflation figure 0.57