AF’s latest annual AgInflation Index reveals the continuing creep upwards in overall cost of farming inputs, but not all, in the year ended 30th September.
The average input cost increase was 0.77% compared with the previous year. But this is only part of the story.
Three of the nine categories of inputs AF procures for Members have shown falling prices with chemicals, animal feed and medicines, and seed seeing greatest decreases at -11.2%, -7.4% and -1.2% respectively.
However, the other six input categories showed increases. Fertiliser is up by almost 11%, contract and hire up by over 6% and machinery, fuel and electricity all up by almost 3%. The lowest price rises were for costs of rent, interest, property and office up 0.7% while labour costs up by just 0.2%.
Meanwhile the Retail Price Index (RPI) increased to 5.2%.
Cereals and OSR: our latest AF AgInflation figures show an increase in cost of growing cereals and OSR of 1.46%, and RPI for bread and margarine has increased by 0.2%. The increase in variable costs and yields in many areas depressed by the weather of ’25 will not alleviate financial threats to overall margins.
Potatoes: costs to produce potatoes in the year to September 2025 increased by 4.8% compared to 2023/24, but the cost to shoppers for stored potatoes and new in the last year decreased by -0.4% according to the RPI. Adverse weather this year has made conditions difficult too.
Sugar beet: production costs increased in the year to September 2025 by 3.97%, a tenfold increase on the previous year. Meanwhile the price of granulated sugar in the shops decreased again, and by more than in the previous year, by -3.4%. The convergence of these two factors, and the reduction in factory price for beet has put pressure on the viability of beet production for some growers.
Dairy: the cost of dairy farming has been helped significantly by a drop of -7.4% in feed and medicine costs to contribute to overall small deflation again, measured at -0.81%. Milk prices paid by consumers show no increase in value in the RPI which may be a factor in holding fresh milk sales and cheese consumption (whether in home-cooked or ready meals) stable.
Beef and lamb: production costs have reduced again in the year to September 2025, but by less than the previous year, to -0.44%. The retail price of minced beef and lamb has increased by nearly 10% over the same period, significantly up from ‘23-’24. During the same period government statistics revealed the continuing fall in both the breeding herd (total numbers of cattle and calves down by -1.4%) and the national flock (sheep and lambs down by -3.8%).
The total food Retail Price Index (RPI) for a basket of foodstuffs has risen over the same one-year period by an average of just over 5%, which is more than the upward trend of the previous two years. This trend is certainly being felt by food shoppers.
The gap between farm input costs and retail prices has narrowed very, very slightly. According to AF, the interesting thing to look for in the AgInflation figure this time next year is for signs of these lines on our graph converging.
AF Members and other rural businesses really rate the hindsight from AgInflation, to interpret their own data on spend but also for their contract negotiations, particularly in potato and fresh produce supply. But foresight is financially just as important and for this, AF procurement specialists share their analysis of AF AgInflation 2025 and the future outlook.
Barry Crossan, AF Head of Utilities Strategy and Data Analytics, explains: “Whilst wholesale cost of electricity has remained relatively flat in the last 12 months, and forward markets currently look equally stable at similar to slightly lower levels, this is the only good news.
“Delivered cost of electricity will increase due to a sizeable uplift in the non-commodity costs, with higher-than-expected increases in projected costs of maintaining and upgrading grid structure to deliver on government renewable generation targets.
“We estimate these fixed charge increases will range between 60% - 130% on a like for like basis and will be seen in fixed charges on business electricity bills from April '26. If your electricity supply is also reassessed and allocated to a higher band (based on recent historic usage or capacity arrangements) this further ramps up fixed costs.
“Spread across a very large consistent annual consumption the percentage increase in kWh cost will be less significant but for smaller and more seasonal usage the increases will be considerable. AF’s Utilities team is working to highlight to our Members the most significant increases expected ahead of these costs being finalised in January 2026.”
AF Chief of Agriculture John Barrett unpicks the reality of costs on farm: “Whilst the crop inputs AgInflation figures seem quite modest, if you look at how much the value of crops such as wheat and sugar beet has decreased, combined with increased costs of production, the impact to farmers is profound.
“From November ‘24 to November ‘25 feed wheat is down 7%, milling premiums are down 66%, feed barley is down 12%, and malting premiums down roughly 50%. Sugar beet is down 7.5% from last year to current year and a further 15% for the crop to be lifted next year.
“For the 2026 harvest, we’re looking at seed costs down 15%. At the same time, we are seeing an increase in use of home-saved seed to reduce costs. Meanwhile, we’re forecasting a continuation of ag deflation in crop protection aligned with a rise in the use of generics (where available). Nitrogen fertiliser costs have risen by 18% since the start of the fertiliser season, putting up costs for wheat in 2026 by c. £26/ha.
“The end result of all these factors combined? AF's responsibility to bring value to our membership is even greater than ever, when farmers are anticipating a year of even greater financial pressure.”
Alastair Nottage, AF Livestock Inputs Procurement Manager comments “It’s interesting to see overall there’s a slight increase in AgInflation this year. On the livestock inputs side, proteins and other straights have been at a 6 year low. There’s a slight upswing in protein prices coming through now as the European Union Deforestation Regulation may take effect.
“With animal meds there are still savings to be had, although we’re starting to see some prices starting to creep up.”
Patrick Crehan, AF Fuel Procurement Manager, adds “Overall, oil prices have dropped in 2025, mainly because OPEC increased production and global demand didn’t grow as much as expected.
“Political issues and conflicts, like sanctions on Russia and trouble in the Middle East, have caused price swings contributing to the 2.6% increase we’ve seen in AgInflation on fuels.
“Overall oil prices in 2025 are noticeably lower than in 2024, as rising supply and weaker demand have outweighed the geopolitical risks that kept prices higher last year. I’m feeling cautiously optimistic about the outlook for 2026. But Russian crude remains the key uncertainty – if additional sanctions are imposed we could see prices rise sharply.”
AF Chief Executive Helen Whittle adds: “Whilst there have been good news stories this year, such as rising price of cattle and sheep, and increased value of oilseed rape, this year’s AF AgInflation data shows agricultural input costs continue to creep upwards.
“It’s vital that buying groups such as AF and our Members work together to maximise savings on cost of inputs. The economies of scale and market share that come from combined buying power are hugely valuable tools, particularly in the price negotiations our team of specialists have with suppliers.
“As an AF Member, you enjoy other, often overlooked, benefits such as negotiation of delayed payment terms, and mechanisms such as Oxbury’s farm credit account scheme, to help you manage cash flow. When your time is a valuable commodity that isn’t always accounted for, our range of digital tools such as our online e-commerce platform AF Online, and Member portal myAF which integrates with accounting packages, can help you do business efficiently and save you even more money.
“That’s why, as we get closer to 2026 and the challenges it’s set to bring to our farming and rural business Members, your AF co-operative is at your side to make sure that we buy better, together.”
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