AgInflation index shows falling fertiliser prices driving down average cost of farming
The falling price of fertiliser has contributed to a drop in the average cost of farming for the third consecutive year according to figures from a Norfolk-based purchasing group.
The AF AgInflation Index is a weighted average using data from the Anglia Farmers’ buying office at Honingham Thorpe, which sources more than £250m of agricultural inputs each year.
The figures for the year from September 2015 to September 2016 show an overall decrease in input costs of -1.14pc.
Fertiliser saw the most dramatic deflation at -18pc with agrochemical prices down -3.2pc.
Those items helped keep the overall index at a negative figure, despite rises in the costs of labour (up 5.9pc), seed (up 2.7pc), animal feed and medicine (up 2.0pc), fuel (up 1.5pc) and rent/interest (up 0.7pc).
AF chief executive Clarke Willis said: “Across the board, with only a handful of exceptions, average costs of farm inputs have seen small increases or decreases. The reduction in fertiliser costs are attributable to lower raw material prices coupled with the lowest shipping rates in 35 years.
“The increase in labour costs is due to the increase in minimum wage in April this year, as well as AF actively sourcing high-calibre temporary staff for its members.
“Fuel has seen a changing market throughout the past 12 months with the best prices in February. The impact of Brexit has resulted in a weaker pound which has therefore pushed up costs to an average 1.5pc inflation.”
The aginflation figures show that farmers growing crops have seen their production costs fall in line with the Retail Price Index, one of the standard consumer measures for inflation, whilst livestock farmers have seen their costs increase.
The figures also show beef and lamb producers have seen their production costs increase by 0.5pc compared to a -6pc deflation in the market place.
Mr Willis added: “Beef and lamb producers continue to feel the pressure as their production costs have increased compared to a reduction in the cost of mince and lamb.”
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