Farming inputs jumped by 34.15% between September 2021 and the end of September 2022, according to the latest October Aginflation Index from AF.
The farm supplies business’ data represents a big annual increase compared to the 22% cost hike recorded in its previous annual index, for the year to September 2021.
Seven out of the nine main input categories have seen at least double-digit inflation, with animal feed and medicine, fuel and fertiliser seeing the greatest jumps at 36%, 42.8% and 133.8% respectively.
The triple-digit growth in fertiliser costs is likely to worsen towards the end of the year, as reported in The Grocer earlier this month, with S&P Global Market Intelligence predicting a 16% year-on-year fall in global exports in the fourth quarter.
The results were described as “alarming” by AF CEO David Horton-Fawkes, who said: “These findings are an existential threat to many farmers and we are seeing signs that some businesses are beginning to struggle and the consequences will be felt by all of us.”
Horton-Fawkes warned “business as usual in 2023 is not going to be an option” and members would have to plan their cashflows and “confront these brutal facts”.
Farmers have begun to take matters into their own hands and make changes to production to try and save money.
“We don’t carry anything in stock we don’t have to, to ease cashflow,” said Penllyn Estate manager Andrew Shackell. “Producing our own energy from solar has slashed our electricity bill. We have changed to organic fertiliser and direct drilling to cut costs.”
But despite changes made on individual farms, no farming enterprise has been able to avoid double-digit inflation, AF said.
Cereals and oilseed rape production had the highest increases in costs at just over 40%. Potato production showed just under 40%, dairy was at 37%, and beef and lamb was up 35%. Sugar beet growing showed the lowest, but still significant, increase at almost 30%.
“We measure our costs as being up 40%. So, this AF Aginflation Index is no surprise to us and it’s something we’ve had to manage,” said Martin Glinski, MD of St Ewe Free Range Eggs. “The biggest one for us and the 18 other farms we support is to pass on the costs.”
The total food Retail Price Index for a basket of food has risen over the same one-year period by an average of 13.1%, which AF has said is the steepest annual rise since AF Aginflation Index monitoring began in 2006.
However, it was still below the level of increased costs being borne by most farmers.
Retail price rises have been increasingly common according to Glinski, who said that whereas in the past five years the company had only had one price increase, in the last year they have had four.
This is why Glinski said it was more important than ever to work with buyers so they understand the cost rises.
“Farmers are tough and resourceful, and we’ve all had our fill of doom and gloom, but no one can afford to ignore these results,” warned Horton-Fawkes.
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