Fertiliser and fuel price drops have driven the first fall in aginflation prices for three years, but there were contrasting trends across the sectors and products.
AFs latest and interim aginflation Index revealed the average cost of farming inputs has decreased, falling by 2.55 per cent in the six months to the end of March 2023.
Two out of the nine categories measured by AF saw double digit negative inflation with fertiliser and fuel seeing the greatest reductions at 30 per cent and 23 per cent respectively.
Three other categories of machinery, contract hire and animal feed and medicine, show slightly falling costs by 2.3 per cent, 1.9 per cent and 1.7 per cent respectively.
But the cost of chemicals was up almost 13 per cent, rent and other business operating expenses up by more than 7 per cent and labour up 6.6 per cent.
Some sectors were benefitting from negative inflation in input costs, including dairy at -4.84 per cent, potatoes at -3.71 per cent and beef and lamb at -2.68 per cent.
Challenges
Arable farmers more broadly were facing challenges, with sugar beet production costs up again by 13.75 per cent as were inputs for cereals and oilseed rape, but only by 0.56 per cent.
AF head of member services, Louis Clabburn, said: What I hear and see is farmers keeping closer eye than ever on costs and the ways they can reduce expenditure where they can.
The reality of living with high levels of aginflation for three years has prompted many changes on farm.
AF also warned supply chain volatility and uncertainty in crop protection products was a big threat to members.
Farmers should be advised to make their move when the price was right, according to AF head of livestock inputs and general Kristian Dunham.
Last year we saw significant increases in feed prices. Already this year we have seen substantial reductions in
feed cereals.
However, proteins such as soya remain expensive. This all means that compound and blended feed prices havent fallen as much as wheat markets may suggest.
Straights-buying livestock farmers may well want to consider booking their wheat now while waiting and hoping for proteins to fall.
There was also significant downward trends in the machinery market.
Many manufacturers have slashed prices dramatically as parts become more readily available and to stimulate spend with customers: a trend I expect to continue as supply constraints ease and competition increases.
