Farm input costs slow down at last

STEEP rises in farm input costs have finally slowed, confirm the latest agricultural inflation figures.

Ag-inflation slowed to 1.53% during the last six months compared to a 13% rise over the preceding year, according to figures unveiled by Anglia Farmers at the Norfolk Farming Conference on Thursday (23 February).

The cost of producing combinable crops rose by 1.88% in the six months ending February 2012 – marginally ahead of other arable enterprises such sugar beet (+1.22%), and potatoes (+1.12%). Larger increases have been experienced by livestock sectors such as dairy (+2.15%), beef and lamb (+2.37%).

All figures are based on average farm and grower expenditure. They suggest farmers’ costs have increased twice as much as the Retail Price index since the AgInflation Index started in 2006.

The Retail Price Index on milk in the last six months shows no increase at retail level. The cost of production for dairy farmers has gone up 65% in the last five years and these costs have not been reflected by the wholesale price.

Consumer prices reflect the ability of the major retailers to influence the market as well as supply and demand. Beef and lamb products have risen in the shops by 6.8% while potatoes have dropped in price by a similar amount.

The overall Retail Price Index for all food has gone up marginally by 0.9% and it is the processed food sector that has held this down. This is the sector that dairy producers have found themselves in.

Fix costs influenced largely by land rents and labour have been the main drivers keeping the inflation figure positive. Fuel and animal feed have also shown rises over the last six months.

The February half-year figure provides a guide as to where the end of year figure might end up. But it does not adequately reflect new season agrochemical prices, which have not been fixed at this stage.