Falling fuel prices are masking slight increases in the cost of some inputs into agriculture, the latest AgInflation Index figures have shown.

The figures, covering the period from September 2014 to the end of January 2015, were published this week by Anglia Farmers and show an overall reduction in input costs of just under 1%.

While the cost of fuel has fallen by 19% (-1.9% in the weighting) other areas have only fallen slightly or, in the case of fertiliser, contract and hire and labour, have increased. With fuel prices having bottomed and starting to rise, now is the opportunity to fix fuel prices for the next 12 months and, in some cases, for the next 24 months, AF said – arrangements can be put in place through Anglia Farmers.
 
Clarke Willis, chief executive of the Norwich-based purchasing group said, “It will not come as a surprise that the cost of fuel has dropped significantly in recent months. This has masked slight increases in other input areas – notably fertiliser, which has increased by 4.6%.

“The reality is that prices at the farm gate are down even further, resulting in a major squeeze for the industry.”

The cost of keeping animals has remained broadly the same. The price of some elements has come down, for example low cereal prices have driven down the cost of animal feed, while the price of animal health products and vets has fallen by only -0.2%.

Labour costs have increased on the back of industry recognition that to keep craftsmen and skilled workers, wages needed to rise.

Figures by enterprise show that production costs have fallen for all cropping – potatoes by -2.23%, combinable crops by -0.77% and sugar beet by -1.83%. For potatoes and sugar beet, this has been reflected by falling retail prices for these products.

The decreasing cost of dairy production has been driven by the falling price of animal feed.

The Retail Price Index has fallen by -0.2% in the same period.

Costs in the index are noted when they are experienced rather than when the inputs are used and the prices reflect prudent purchasing practice so may include, for example, fertiliser purchased but not applied  until the following year.

Launched in 2006, the index has become a definitive tool for assessing the cost of farming productions and guiding negotiations within the wider food industry.