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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!

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