Agflation surges to 8.4% as fears grow over farm cost crisis

Agricultural input inflation has surged to 8.4%, intensifying pressure on UK farmers as new analysis from Andersons warns a potential “cost of farming crisis” is beginning to emerge across the sector.

The consultancy said “agflation” is now running well ahead of both consumer and food inflation, while agricultural output prices have fallen 5.8% year-on-year, leaving producers squeezed between soaring costs and weakening returns.

Andersons warned the widening gap between rising production costs and falling farmgate prices was creating one of the toughest trading environments farmers have faced in recent years.

The latest agflation figure represents one of the sharpest cost increases seen since the inflation surge that followed Russia’s invasion of Ukraine.

The warning comes amid growing concern across the rural sector over food security, farm profitability and the long-term viability of British agriculture.

Those pressures were among the key issues discussed at a recent Central Association of Agricultural Valuers (CAAV) event, which brought together around 80 figures from across the farming, environmental and professional sectors.

Jeremy Moody, secretary and adviser to the CAAV, said farmers were facing mounting financial and political challenges which required careful and balanced policymaking if businesses were to remain viable.

“There was a real range of discussions and a lot of quiet diplomacy,” he said.

Food security was one of the main concerns raised during the event, particularly for arable producers already struggling with rising farm input costs and weak profitability. Moody said higher costs linked to global instability would continue to affect every sector of agriculture.

The latest Andersons figures show agricultural input inflation significantly ahead of CPI inflation at 3.3% and food inflation at 3.5%.

The consultancy said conflict in the Middle East was continuing to drive up fertiliser, fuel and energy costs across UK agriculture, with concerns over disruption to shipping routes adding further strain to global markets.

Urea fertiliser prices are now estimated at between £650 and £700 per tonne, while ammonium nitrate prices are also rising due to higher gas market costs. Dairy systems are expected to face some of the most immediate pressure because of continued fertiliser demand through the spring and summer.

Livestock producers are also facing worsening margin pressure. Andersons estimated milk prices were around 25% lower than a year ago, while pig prices had fallen by 12%. Beef prices have also eased from the near-record levels seen during 2025.

While cereal prices have strengthened in recent months, concerns are also growing over the impact of dry weather on yields in several parts of the UK, adding further uncertainty for arable businesses ahead of next season.

Moody said ministers needed to understand the impact rising costs were having on farm businesses, including whether agriculture should be prioritised for fuel access during periods of disruption.

Representatives from Defra, farming organisations, regulators, environmental groups and universities attended the reception, with discussions also covering inheritance tax, labour shortages, farm productivity and artificial intelligence.

Delegates raised concerns over renewable energy development and Government proposals to transfer food chain rule-making powers to Brussels.

Paulo Barros Trindade, chairman of the European Group of Valuers’ Associations (TEGOVA), said changing land use, energy policy and generational shifts were rapidly reshaping rural land markets.

“Rural land is changing faster than many realise,” he said.

He warned valuation systems would need to evolve alongside those changes to maintain stability and confidence within the market.

CAAV president Julie Liddle said trusted rural advisers would become increasingly important as businesses adapt to rapid economic and policy change, while the organisation also continued efforts to attract new entrants into the profession through its Route to Rural campaign.

Moody said collaboration across the sector would be critical as farming businesses continue to face economic uncertainty, climate pressures and succession challenges.

“Supply chains are changing and fracturing, family businesses are trying to manage profitability and succession planning, and farmers are dealing with climate change and weather extremes alongside environmental improvements,” he said.