Unwelcome face of ag-inflation

The latest figures from the Anglia Farmers Agricultural Inflation Index already show an overall rise of 16.65 per cent since September 2007.

The calculations are based on consistent cost change information from the purchasing co-op’s buying office on 76 products ranging from a ton of Cocktail barley seed, the cost of haulage, to the price for 100 fence posts – not unlike the method used for the retail price index with products grouped and then weighted.

Not surprisingly, the rises in fertiliser, fuel and feed prices are now coming through to have a significant impact on agricultural cost inflation.

“The six months to March gives a good indicator as to what the annual figure to September 08 will look like,” said Jim Alston, who is a farmer director of Anglia Farmers and is co-ordinating the AF Ag Inflation Index.

“Over 18 months the increase becomes a frightening 24 per cent.

“While some parts of UK agriculture have seen a rise in income that helps to cover rising costs, other parts of the industry have not.

“As before, the hardest hit has been dairying due in the main to the sharp rise in feed costs but rises in the cost of power and fertiliser have also had an effect. For all arable crops, fertiliser and fuel have provided the greatest impact though there has been a general rise in most input costs.

"A significant part of fixed costs are machinery and the repair and servicing of that machinery and since these revolve around steel and again oil the rise has been significant.

“Fertiliser is in the headlines at present due to the sharp rises in price. As far as the index is concerned the price taken for comparison is not the price on March 31 as this would not be the action of a prudent farmer.

"The price taken is intended to represent a bulk purchase made at an opportune time during the period. As the price of all grades of fertiliser has continued to rise since, I expect the annual figure will show an even greater rise,” said Mr Alston.

And latest feed price data published by MDC Datum shows that the spread of dairy ration prices have increased by £8/tonne between March and April.

This gives an average price for low energy specification of £176/tonne which is £63/tonne (55.8 per cent) more than the average price in April 2007.

Contributing factors include the strike by farmers in Argentina over export taxes, leading to a shortage of Argentine soyameal and felt likely to have influenced the average price of Hipro soyameal, which at £315/tonne is £50/tonne higher than in March.

This is £166/tonne more than the price 12 months ago, when the average price of Hipro soyameal stood at £149/tonne, says MDC.

There was also an increase in the average price of rapeseed meal and maize gluten compared to the previous month, rapeseed meal increasing by £22/tonne to an average of £215 and maize gluten up by £12/tonne to £180.

Feed wheat prices eased slightly in April to an average of £181/tonne, £12/tonne or 6.2 per cent less than the average price in March. Nevertheless, prices remain £77/tonne or 74.0 per cent more than the average price in April.

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