Figures from the latest Anglia Farmers AgInflation Index show that the falling costs of key arable inputs have lowered the average cost of agricultural production in the last 12 months. The figures for the year from January 2015 – January 2016 show an overall reduction in input costs of -4.35%. The main drivers for the reduction are the significant drops in fuel prices (-20.7%) and fertiliser (-13.6%).
Commenting on the figures, AF Group chief executive Clarke Willis said:
“Seed costs have not seen much change because while we have seen a reduction in cereal seed prices, the cost of potato seed has risen significantly.”
The figures show continued inflation for direct costs, with labour and rent increasing by 1.9% and 1.5% respectively.
The average cost of production has fallen for all types of farm enterprise. Although the gap between production costs and RPI is narrowing, when viewed in terms of price in the market place farm incomes continue to struggle.
The AF AgInflation Index figure of -4.35% is the largest drop in production costs seen since 2009, when deflation of -6.3% was recorded.
Launched in 2006 by Anglia Farmers, the index has become a definitive tool for assessing the cost of farming productions and guiding negotiations within the wider food industry.
Using information from the group’s buying office, which has a sourcing power of more than £250million, it is intended to reflect the changing expenditure of farming and is a weighted average of nine cost centres and 132 cost items. Weightings within cost centres and between them are based on average farm and grower expenditure.
Source: farminguk.com