Average cost of farming inputs falls for first time in three years

The average cost of farming inputs has decreased for the first time in over three years, falling by over 2.5% in the six months to the end of March 2023.

Two out of the nine categories of inputs saw double digit negative inflation, according to AF’s latest Aginflation Index, with fertiliser and fuel seeing greatest falls at 30% and 23% respectively.

Three other categories of machinery, contract hire and animal feed and medicine show slightly falling costs by 2.3%, 1.9% and 1.7% respectively.

However, three important types of farm inputs continue their upward inflation with cost of chemicals up almost 13%, rent and other business operating expenses up by over 7% and labour up 6.6%.

While some are enjoying negative inflation in the costs of their inputs, dairy (-4.84%), potatoes (-3.71%) and beef and lamb (-2.68%) others are seeing the opposite.

Sugar beet production costs are up again by 13.75% as are inputs for cereals and oilseed rape, but only by 0.56%.

Over the same six-month period the total food Retail Price Index has risen by 14.3%.

This average increase in prices for a basket of key foodstuffs is derived from greatly different values for particular household food essentials.

Milk shows the biggest price increase (44%), with bread and margarine next (27%) followed by beef and lamb meat (16.3%), potatoes (12.2%) and sugar (7%).

AF chief executive, David Horton-Fawkes, said that while dip in Aginflation was 'very good news', it was "too variable across different types of farm business to give much cause for relief."

"The gap between the cost of production and the value of sales is still too wide and too variable to be sustainable," Mr Horton-Fawkes said.

"The significant drop in fertiliser prices is, of course, welcome but many farmers bought their fertiliser when prices were still sky high and now output values are falling, so this could be a very difficult harvest for farmers.

"It’s alarming that crop protection prices are continuing to rise, and we are encouraging our members to look beyond brand names and focus on active ingredients."