UK farmers face “eye-watering” inflation in input costs, the country’s biggest farmer-owned buying group says in its latest report.
The Interim Aginflation Index from AF, which represents more than 3,000 farmer members, says that no farming enterprise has been able to avoid double digit inflation – and the cost of farming inputs has increased by 23.28% in just six months to the end of March 2022.
This comes on top of the almost 22% increase recorded in the annual Index recorded in the year to September 2021, the co-op adds.
Four out of the nine categories of inputs saw double digit inflation with animal feed, fuel and fertiliser seeing greatest increases at 27%, 29.4% and 107.7% respectively.
Cereals and OSR production show the highest increases in costs at 28.05%, and sugar beet growing as the lowest but still at 18.97%.
While the total food Retail Price Index has also risen – by an average of 5.6% over the same six-monh period, AF says this is not enough to cover farmers’ rising costs.
The only food group to show negative inflation is potatoes at -2.3%. The dairy enterprise category has inflation reaching 21.32% in the last six months. However, the increased value from milk retail of 19% is closing the gap.
Volatility is part of the problem over the period, says AF, but availability is also an issue. Matt Kealey, head of crop inputs at AF, said: “The turbulence in the fertiliser markets has been challenging but, through AF, members have secured product despite early concerns regarding availability. The value to members in core sectors like fertiliser and crop protection products is the AF procurement teams’ supplier networks and real time market intelligence.”
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AF CEO David Horton-Fawkes said: “The evidence in our latest Aginflation Index illustrates the crisis many farmers are facing, and the consequences will be felt by all of us in society.
“The causes are deeply rooted and go beyond the appalling events in Ukraine and the continued lockdowns in China. Farmers are inherently resourceful, but cash flow now poses an existential threat to many businesses because some farmers simply won’t be able to afford to grow crops or raise livestock next year.
“Beyond the immediate crisis, the combination of war and post-pandemic disruption highlights the strategic imperative to secure more resilient supplies of essential farm inputs and energy and the need to develop more collaborative relationships with supermarkets and processors.
“Sadly, the most acute pain will be felt by those who can least afford to bear it, but these numbers reveal that the whole supply chain web needs to reset to secure affordable food in the UK and beyond.”
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