Skip to main content

Farm Inflation

Farm inflation over the past four years has been brutal.  

Fertilizers are a massive cost to the farming community.  Costs in 2020 were below-trend for fertilizers. 2021 was a strange year because of covid.  In 2022, the Russian attack on Ukraine led to a massive rise in fertilizer prices, as the world's top two fertilizer-exporting nations went offline (Russia & Ukraine).  In 2020 UK farmers spent a total of £ 470 million on fertilizers.  In 2022, UK farmers spent £ 1,620 million on fertilizers.  2023 estimates are that the total will be close to £ 1,900 million.  

Feed: The next item is the price of grain, an important cost in livestock (we only feed grains to our livestock when it's very cold).  For the majority of farmers, grain feed is 30% to 40% of their livestock's calorie intake, and prices have risen by nearly 80% over the past 4 years.  

Third, red diesel which was £ 0.58 in June 2020 is now £0.83 per litre nearly 45% increase, LPG prices have only in the past month been below their five-year average.  The average for 2022 and 2023 was 112, whereas the five-year average is 59.  Farms are happy right now, but in the last two years, four of their main ingredients saw an average cost rise of nearly 100%. Finally, 2020 saw the end of our European experiment, which means that UK farmers saw a fall in subsidies of £1,800 million.  

At the same time, food prices have not kept up.  2020 and 2021 saw food prices fall by 0.3% p.a.  It is only in 2022 and 2023 that food prices rose by 20% p.a.  During the same period, farm input costs rose by an average of 20% per annum.  Today, farmer net revenues are 50% lower than they were in 2020.  That's why over the past two years farm bankruptcy has been rising.  The marginal farms had to go.  The worst affected with be in the North West of the country where farms are smaller and further from the primary markets.  

It is therefore understandable that farmers, especially in the North West of the country are seriously pissed when the government seems to introduce new legislation to make their lives even harder, when they are just about to finally pull ahead.  Out here in the East consolidation took place decades ago, and farms today are much larger.    

No advocacy here today, just the facts!

Comments

Post a Comment

Popular posts from this blog

what people get wrong about tariffs

 The issue is simple. What percentage of the economy is dependent on tariff goods? The truth, is that the US economy is far more closed than people understand. People genuinely believe that all manufacturing has ceased to exist in the United States all given to China on the altar of woke policy the truth can be further from That statement. Only about 15% of US GDP is related to foreign trade. Of that amount, slightly more than half is from Canada in Mexico. And half of that is energy. What that means, is that about 7% of US GDP is tariff dependent. The proof in the pudding, is how little money tariff generates. People think that 30 or 50 billion is a lot it’s not in an economy that has $3 trillion. The impact on the US economy will be less visible but not absent. Inflation hasn’t occurred yet first because tests have hardly started to bite, but more importantly it’s such a small percent of the economy. Now certain things are critical. The rare earth metals from China were critical....
Post a Comment
Read more

The end of Tesla?

 it takes a special kind of idiot, to think that he can antagonize his entire customer base, and think that it will not impact his business. When Elon Musk went to work for Donald Trump, and created the doge department, he antagonized every liberal, and these people represent 90% of his client base.That’s not a brilliant move. Now Elon Musk is worth hundreds of billions of dollar, so he shouldn’t care a great deal, however, he needs to care because of several other issues. The cyber truck has been a disaster, most have had to be recalled because of defective glue, it’s not a truck, it’s not a car, it’s noisy, relatively uncomfortable, but great as a development platform. What Tesla has learned in making car manufacturing more seamless is truly amazing. The problem was that Elon Musk was so pissed with the Democrats, and with Joe Biden, in particular because of some slight, which were just plain stupid too. By the way, that he decided to support with hundreds of millions of dollar, ...
Post a Comment
Read more

Trump and Venezuela...

The US now owns Venezuela…and not in a good way.  America is not known for its nation building skills, and yet it now owns the disaster that is Venezuela.   Starvation and exodus are the natural progression.   In addition it will become a haven for narco-terrorists, more so than it already was. I am sure that Trump and his friends really thought that little attack very well…I guess that he will now attack Iran now.  
Post a Comment
Read more