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Dramatic cost rises hit farm businesses

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Farming costs in the region have leapt in recent months, led by a 17% rise in feed and animal health product prices.  Results for the last six months of the Anglia Farmers agricultural inflation index have shown an increase in farm input costs of 4.39% since August 2012, an increase on the 3.38% over the entire previous year.

The figures, which will be presented at the Norfolk Farming Conference today, also reflect a surge in fuel (11.2%) and seed (10.2%) costs. Only machinery (-6.4%) saw a fall.

Costs have gone up for all farm types. Livestock areas have seen the largest increases with dairy costs rising by 10.07% and beef and lamb by 9.83%. The cost of producing combinable crops has gone up by 2.76%, with sugar beet up by 3.73% and with potatoes rising significantly to 10.89%.

Farmers profitability has come under pressure. Comparing figures since 2006 at the base rate of 100, the RPI is now 139 and AgInflation is 174.

The prices paid by consumers mirror some of the rises in AgInflation. The RPI on potatoes has increased by 25.7% over the past six months and the RPI on bread and margarine has increased by 4.6%. Beef and lamb prices have risen in the shops by 3.4% but the cost of production to farmers has increased by 9.83%.

But some products show no increase at retail level. While the cost of production for dairy farmers has risen by 10.07%, wholesale milk prices have not changed.

Clarke Willis, AF Group CEO, said: “While the costs of cereal and oilseed rape production have risen, inflation has been lower than for other enterprises as fertiliser and chemical costs have both seen increases of less than 1%. The dramatic increase in the cost of potato production has been driven by the limited supply of potato seed following last year’s very poor harvest.

“The rising cost of fuel has affected all sectors and rising animal feed prices have caused significant increases in production costs for livestock and dairy farmers.

Launched in 2006 by Anglia Farmers (AF) and compiled by Norfolk farmer and former AF director Jim Alston, the index has become a definitive tool for assessing the cost of farming production and guiding negotiations within the wider food industry.

Last Updated ( Thursday, 21 March 2013 10:01 )