Annual results from the Anglia Farmers AgInflation Index show that the input costs for producing food by farmers and growers are up by 12.98% in the twelve months to the end of August 2011.

Individual enterprises show the cost of producing combinable crops has risen by 13.33% in the same period. This increase lies marginally ahead of other enterprises such as dairy (+12.29%), sugar beet (+11.63%), beef and lamb (+11.24%) and potatoes (+10.45%).

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 farmers assessing their cost of production and guiding negotiations within the wider food industry.

Using information from the group’s buying office with a sourcing power of £250 million, it is intended to reflect the changing expenditure of farming and is a weighted average of nine cost centres and 132 cost items. Weightings within cost centres and between them are based on average farm and grower expenditure. Importantly, prices reflect the prudent 'planned purchasing' option so may include, for example, fertiliser not applied until the following year.

Figures for the nine cost centres clearly show double-digit inflation for seed, fertiliser, livestock feed, machinery and fuel. Since the AF AgInflation Index began in October 2006, increases from the base figure of 100 have been noted across all sectors with fertiliser showing the highest increase of 123% over five years.

Based on a method similar to that used for the UK Retail Price Index, these products are grouped and weighted. Also important from a food production point of view, is a comparison with the UK Retail Price Index (RPI). Comparing figures since the AF AgInflation Index started in 2006 at the base line of 100, the gap between them is 132 and 162 respectively. Therefore farmers’ costs have increased twice as much as the RPI.

Clarke Willis – group chief executive of Anglia Farmers – said: "Overall agricultural inflation of 13% is extremely high for an industry to absorb in one year. As ever, our ability to buy inputs and a whole range of goods and services on behalf of our members as competitively as possible continues to be an absolute necessity for them to remain profitable. The input supply chain within the agricultural supply industry needs to be constantly challenged to contain costs."