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

Ok so I lied...a little (revised)

When we began looking at farming in 2013/14 as something we both wanted to do as a "second career" we invested time and money to understand what sector of farming was profitable.  A few things emerged, First, high-quality, source-proven, organic farm products consistently have much higher profit margins.  Secondly, transformation accounted for nearly 80% of total profits, and production and distribution accounted for 20% of profits: Farmers and retailers have low profit margins and the middle bits make all the money. A profitable farm operation needs to be involved in the transformation of its produce.  The low-hanging fruits: cheese and butter.  Milk, generates a profit margin of 5% to 8%, depending on milk quality.  Transformed into cheese and butter, and the profit margin rises to 40% (Taking into account all costs).  Second:  20% of a steer carcass is ground beef quality.  The price is low, because (a) a high percentage of the carcass, and (b) ground beef requires process
Post a Comment
Read more

Spray painting Taylor Swift G650 aircraft (updated)

 First, a bit of paint will not harm anyone.  These climate activities are going to learn two things in the next few days:  (1) Trespassing at an airport is a felony almost anywhere in the world.  That means criminal prosecution.   (2) removing paint from an aircraft is expensive.   So these climate activists are about to find out the reach of the British criminal system and it will not be pleasant, the UK has very strict laws about that, I would be surprised if cleaning the aircraft of all the paint will cost less than $100,000.     I am sure that when they planned (premeditation) this little show they had a very valid logic to doing this.  Tonight, they are probably realizing the depth of their troubles.   I understand that in the UK it's a minimum one-year jail sentence.    Also, good luck travelling with a criminal trespass charge against you.  I am relatively certain that the airline industry will slap them with no-fly status. Update;  It seems that what they threw on the airc
Post a Comment
Read more

21st century milk parlour

When we first looked at building our farm in 2018, we made a few money-saving decisions, the most important is that we purchased our milk herd from a retiring farmer and we also purchased his milking parlour equipment.  It was the right decision at the time.  The equipment dates from around 2004/05 and was perfectly serviceable, our installers replaced some tubing but otherwise, the milking parlour was in good shape.  It is a mature technology. Now, we are building a brand new milk parlour because our milking cows are moving from the old farm to the new farm.  So we are looking at brand new equipment this time because, after 20 years of daily service, the old cattle parlour's systems need to be replaced.  Fear not it will not be destroyed instead good chunks will end up on Facebook's marketplace and be sold to other farmers for spare parts or expansion of their current systems. All our cattle are chipped, nothing unusual there, we have sensors throughout the farm, and our milki
Post a Comment
Read more