New statistics released by ADHB show that farm profitability may be impacted in 2024, due to short-term variability in input costs and inflation for UK farm businesses.
The report found that overall, there has been a general decrease of 6.5% across the latest Agricultural Price Index (API), which measures all agricultural outputs.
This remains lower than inflation across farm inputs, despite all agricultural inputs falling 10% year-on-year.
However a general easing across food price inflation doesn’t mean that farm inputs will remain low, AHDB warn. Recent and ongoing disruption in the Middle East has the potential to cause short-term variation across costs for a number of farming inputs.
The conflict between Israel and Gaza has caused commercial shipping delays in the Red Sea, they report, which has negatively impacting trade and imports of key inputs, including fertiliser and oil.
While the rates of these disruptions are yet to be seen, it is predicted that this will influence prices and increase domestic inflation because of a need for transport means to use extra costs to help avoid key shipping lanes that are inaccessible.
Generally, there have been positive declines seen across the board for a number of the most costly farming inputs. Fertiliser inflation saw the biggest decrease, dropping 50% since the start of the year, and down 51% since a peak in September 2022.
Energy and fuel price inflation decreased 17% since the start of 2023, and was down 18% from a November 2022 peak caused by the invasion of Ukraine. An area that does seem stable is the rate of compound feed inflation, which has remained the same since July 2023.
There is concern surrounding UK wheat prices because of Black Sea grain supplies and global weather influencing commercial supply. Alongside decreased demand, the market conditions are looking set for a downward trend.
More information can be found on these predictions can be found here.