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Farm input costs outstrip inflation

February 24, 2011 by  
Filed under News & Business

FARM input costs are rising faster than inflation, according to the latest figures from Anglia Farmers.

Input costs rose 8.39% during thesix months from August 2010 to February 2011, reveals the Anglia Farmers Agricultural Inflation Index. Over the same period, the UK Retail Prices Index (RPI) rose 5.15%.

The RPI for food was 3.6% during the same six-month period with pasteurised milk registering no increase at all. This shows increased production costs are still not yet being passed on to the consumer.

Compiled by Norfolk farmer and former Anglia Farmers director Jim Alston, the AF AgInflation Index is based on actual cost change information from the £200m buying group covering 130 products and services.

The method is similar to that used for the retail price index (RPI) where products are grouped and then weighted.

The index represents the actions of a reasonably efficient farmer who would have pre-ordered a significant part of his requirements, including a proportion of animal feed.

The overall agricultural inflation index covers nine cost centres and the impact of these is then equated to five enterprise sectors:

  • Combinable crops – 8.51%
  • Potatoes – 6.69%
  • Sugar beet – 6.16%
  • Dairy – 6.69%
  • Beef & lamb – 6.44%

Clarke Willis, Anglia Farmers chief executive, presented the results at the Norfolk Farming Conference on Thursday (24 February 2011).

“Agricultural production costs have gone up by over a half in the last 5 years. On top of this, we’ve experienced incredible volatility in the marketplace.

Yet more forward planning and risk management was vital in agricultural business, said Mr Willis. Anglia Farmers was putting together further structures to enable its members to improve risk management, he added.

“This has been successful in the last six months with electricity and animal feed but we need to work harder with suppliers on doing the same with fuel and fertiliser.

“It is more important than ever for farmers to get together and benefit from group purchasing.”

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