Fuel prices drive a 4.9pc increase in farming costs, according to AF Aginflation Index
PUBLISHED: 06:59 03 November 2017 | UPDATED: 14:17 03 November 2017
Rising fuel prices continue to drive an increase in the cost of farming, according to the latest inflation figures compiled by a Norfolk-based purchasing group.
The AF AgInflation Index is a weighted average of 130 cost items using data from the AF (Anglia Farmers) buying office at Honingham Thorpe, which sources more than £230m of agricultural inputs each year.
In the 12 months to September 2017, the index shows a 4.92pc increase in the average cost of agricultural production inputs
The biggest influence on that figure was fuel price, which rose 11.5% due to the increase in the cost of crude oil and a devaluation of sterling against the US dollar in the first half of the year.
AF Group chief executive Jon Duffy said: “In the 12 months to September 2017 Brent Crude Oil has increased from US$46 to US$55.9 per barrel.
“Couple this with an initial devaluation in the exchange rate between September 2016 and February 2017 of 1.31 to 1.25US$/£, the past six months has seen the exchange rate strengthen to 1.33US$/£ in September 2017. All in, the global fuel marketing remains volatile with the ever-changing cost of Brent Crude Oil and the fluctuating exchange rate.”
Other agricultural costs showing an increase were fertiliser (up 8.7pc), seed (up 7.3pc); and contract and hire (up 8.5pc). Crop protection costs rose by 0.9pc, despite previously seeing deflation at -0.28pc in the period between October 2016 and February 2017.
AF fertiliser and seed business manager Chris Haydock said: “The seed rises are down to the increase in grain prices, while the strength of the euro and the US dollar means I can’t see fertiliser prices reducing in the short term. Importers of ammonium nitrate have struggled and further increases are expected. Granular urea has risen, while potash and phosphate prices have risen circa £15 per tonne over the season so far.”