Farmers are being urged to budget carefully and look at ways to reduce fuel consumption as energy prices soar.
Crude oil hit $100/barrel for the first time last week and red diesel has already reached 50p/litre across the country.
Gas and electricity suppliers are also expected to increase their prices after NPower, Britain’s fourth-largest energy supplier, announced a 17.2% rise in gas bills. The supplier also pushed the price of electricity up by 12.7%.
Signs pointing down
John Ringwood at nationwide supply co-op ACT said red diesel was showing signs of “dropping slightly” from the 54p/litre highs reached last month, but prices would still hover at about 50p/litre.
“I don’t anticipate any substantial downward movement of prices over the coming months, as the factors driving the price rises, including increased demand from India and China, are still in place,” he said.
“The higher prices just have to be accepted. All people can do is shop around for the best price.”
Carl Atkin of farm consultancy Bidwells said arable farmers now paid an average £25/acre for fuel, a threefold increase from £8/acre in 2000.
“What is critical is the amount of ‘recreational’ cultivation which still takes place on some farms and eliminating unnecessary operations,” Mr Atkin said.
“While this has undoubtedly happening on some farms, for some businesses there might still be further scope for improvement.”
Peter Chapman, a dairy farmer from Middlesbrough, said he was “very concerned” about the increase in fuel costs.
He recently entered into a year-long electricity contract with British Gas, which charges £650 a month.
“That price is fixed for the year, but how big the jump will be at the end of that time is a big worry,” he said.
“The increases are cancelling out any benefit we get from an increase in milk price, especially with the rising costs of feed and red diesel.”
The 2p/litre hike on fuel duty due in the spring would not help either, he added.