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Agricultural enter prices have risen by virtually 30% prior to now 12 months, particularly in the newest two months.
Ranges of agricultural inflation within the UK had been already reportedly excessive at about 10% previous to the Ukrainian battle.
Advisor Andersons has estimated “agflation” is presently at 28.8% a 12 months, closely outweighing the patron value index, which stood at 6.2% within the 12 months to February 2022.
See additionally: Excessive N costs increase profile of dwarf clover at Overbury Farms
The agency’s “Agflation” index is calculated utilizing the prices of every agricultural enter based mostly on Defra’s value indices, and weighting them in opposition to the general spend on every enter by UK farmers.
Feed prices account for nearly 1 / 4 of the index; different commodities reminiscent of gasoline and fertiliser are additionally included.
These commodities could make the index extra variable than common inflation.
Many farm companies are prone to want to increase present credit score amenities with banks on account of inflation and a rise within the quantity of capital wanted.
Michael Haverty, associate and advisor at Andersons, mentioned the worth of ammonium nitrate has risen from £645/t in January, to greater than £900/t.
Purple diesel costs are presently being quoted at as much as 130p/litre, in comparison with a median value of 66p/litre in 2021, in response to AHDB figures.
Russia’s significance in power markets will pose vital challenges for the industries counting on these commodities, in response to Mr Haverty.
Pure fuel is required for ammonium nitrate manufacturing, and it will result in fertiliser costs remaining elevated.
Mr Haverty mentioned: “On the farm degree, the excessive price of inputs will problem many companies within the subsequent 12 months and past. The working capital of farms can be underneath critical strain.
“Whereas output costs have risen in some sectors (for instance, cereals), these have after all created extra strain on feed prices within the livestock sectors.
“Throughout all sectors, the extent of money required to function has additionally been rising significantly.”
Andersons has produced an internet seminar on the implications for UK farming and financial outlook.
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