Use the tool for business planning
The AF Aginflation Index is a useful tool for farmers of a wide range of crops to review their expenditure and procurement partners.
AF Member Tony Bambridge of B & C Farming Limited says, “The real benefit of the AF Aginflation Index is its integrity and independence, meaning farmers and the wider food supply industry can rely on this independent data to illustrate the true cost of inflation. For every £100 you needed a year ago you now need £150 to just run your business in the same way. This really robust data that gives the Index is incredibly useful to us in our discussions with our customers. The critical thing is can we retain that margin that we need?”.
In Yorkshire, carrot and cereal growing AF Member Rodger Hobson comments that the value of the AF Interim Aginflation Index is useful because “it’s crystallising what we on the ground already knew is happening. And that we have to get the message out there so people understand the challenge we are facing”. It is also making him question the future of forward contracts. “What looked like a sensible deal that we signed in December (before the war in Ukraine and other challenges) does not look so good now. How can farming have forward pricing when things are so volatile?”.
Certainty of supply
Volatility is part of the problem over the period measured but so has availability. Head of AF Crop Inputs Matt Kealey says, “The turbulence in the fertiliser markets has been challenging but, through AF, Members have secured product despite early concerns regarding availability. The value to Members in core sectors like fertiliser and crop protection products is the AF procurement teams’ supplier networks and real time market intelligence.”
Driving deals to help keep costs to farmers down
Ever mindful of the inflationary pressures for farmers, AF exerts pressure on the supply chain to them. For example, according to Kristian Dunham AF Head of Livestock Inputs and General, this spring Members faced a price increase of 22% on the key lambing vaccine for ewes. AF negotiated an exclusive postponement until June 2022 for sheep farmer Members on this business-critical vaccine.
Monitoring aginflation helps farming business
As ever, the latest Aginflation Index from AF is eagerly anticipated by many in the farming sector. We hear from Members how they use the facts in our report in their negotiations with buyers.
AF Chief Executive David Horton-Fawkes says, “The evidence in our latest Aginflation Index illustrates the crisis many farmers are facing, and the consequences will be felt by all of us in society. The causes are deeply rooted and go beyond the appalling events in Ukraine and the continued lockdowns in China. Farmers are inherently resourceful, but cash flow now poses an existential threat to many businesses because some farmers simply won’t be able to afford to grow crops or raise livestock next year. Beyond the immediate crisis, the combination of war and post-pandemic disruption highlights the strategic imperative to secure more resilient supplies of essential farm inputs and energy and the need to develop more collaborative relationships with supermarkets and processors. Sadly, the most acute pain will be felt by those who can least afford to bear it, but these numbers reveal that the whole supply chain web needs to reset to secure affordable food in the UK and beyond.”
Notes
The AF Aginflation Index is a weighted average of over 130 items using data from the AF procurement teams which spend more than £250m a year to procure farm inputs on behalf of Members.
Each year, AF sources
- 200,000 tonnes of fertiliser;
- Over 14,000 tonnes of cereal and pulse seeds;
- 105,000 tonnes of feed;
- 90 million litres of fuel;
- Over £2 million worth of tyres; and
- Over £10 million worth of building materials.
