Minette Batters’ recent Farming Profitability Report predicts farm input costs will rise to 30% higher in 2026 than they were in 2020. With procurement of inputs typically representing 30-70% of any farm business’s revenue, it’s clear that effective procurement can have a major impact on profitability. AF’s Head of Machinery & General Inputs, Kristian Dunham, explores how procurement thinking is already embedded in farming - and why rising costs highlighted in recent analysis from Minette Batters mean procurement strategy will become even more important.
“Farmers understand soil health, machinery efficiency, livestock performance, fuel consumption, weather risk and market volatility in a way few outside the sector ever truly grasp.
“Procurement professionals, meanwhile, are trained to think in terms of:
leverage
risk exposure
stakeholder influence
supplier power
long-term value.
“The challenge? These two disciplines often operate in parallel rather than in partnership.
“Yet the reality is that many people working within agricultural businesses are already practising procurement every day — even if they don’t see themselves as procurement professionals.
“They may describe themselves as buyers at best, but their daily responsibilities include:
buying fuel
negotiating supply contracts
sourcing fertiliser
managing input contracts.
“Sound familiar? What you’re actually doing, day in and day out, is farm procurement. Without necessarily recognising it, those decisions shape:
risk exposure
supplier dependency
margin protection
long-term resilience
overall business value.
“According to the Department for Environment, Food & Rural Affairs (DEFRA), the highest-performing 25% of farms are around twice as profitable as the lowest-performing quarter, highlighting the impact that structured business management - including procurement - can have on profitability.
“That’s where structured development and training become powerful. Many AF colleagues, myself included, have undertaken professional development through organisations such as the Chartered Institute of Procurement & Supply (CIPS). Training like this gives language and structure to decisions that are already happening on farms.”
“Agriculture is rich in practical experience. Procurement adds methodology.
“Take stakeholder analysis. On a farm - or within an agricultural group like AF - purchasing decisions rarely affect just one person. Operations, finance, agronomy, compliance, and sustainability targets often have competing priorities.
“Mapping influence and interest may sound like corporate theory, but in reality it simply provides clarity in business decision-making. One widely used procurement framework is the Kraljic Matrix, which categorises purchases based on supply risk and financial impact.
“At first glance it might sound complicated. In practice, it’s simply a way to break purchasing categories into four types:
strategic
leverage
bottleneck
routine.
“Suddenly, things like fuel, machinery parts, crop inputs and specialist services stop being seen as generic “costs”. Instead, they become distinct risk categories within the farm supply chain. For example:
A fuel contract in a volatile market is likely a strategic purchase.
Workshop consumables might be routine.
A single-source part for essential machinery could represent bottleneck risk.
“Without a framework like this, time and negotiation effort can easily be spent in the wrong place. With it, energy is focused where it matters most - protecting margins and reducing risk.”
“One practical example of procurement strategy in farming is fuel forward fixed purchase agreements (FFPs). These contracts allow farmers to purchase a fixed quantity of fuel at an agreed price over a defined future period. This means that when negotiating supply contracts or contracting agreements, the cost of fuel is already fixed. Even if market prices rise, those costs remain covered.
“In other words, procurement becomes a tool for risk management. In recent weeks, as conflict in the Middle East escalates and markets react, we’ve seen AF Members with FFPs saving around 40 pence per litre on diesel.
“That’s procurement strategy delivering measurable value.”
“Modern agriculture operates within one of the most complex supply chains in the UK economy. Farm businesses are exposed to:
global commodity pricing
energy market volatility
environmental and sustainability requirements
geopolitical disruption
ESG pressures across supply chains.
“All of these factors ripple down to farm level. This is why bridging farm expertise and procurement specialism is increasingly important.
“When procurement discipline is layered on top of agricultural knowledge:
risk becomes measurable
supplier relationships become strategic rather than transactional
negotiation becomes structured rather than reactive
farm spending becomes segmented rather than generalised.
“Importantly, procurement stops being viewed as “buying the cheapest option” and starts being recognised for what it truly is: value management.”
“The opportunity for organisations like AF is to strengthen - not replace - farming expertise. Farm knowledge already provides the what and the why. Procurement discipline strengthens the how.
“The goal isn’t to corporatise farming. It’s about equipping agricultural professionals with tools to make confident, commercially sound decisions in an increasingly volatile market.”
“The gap between farming and procurement isn’t a weakness. It’s an opportunity.
“By combining sector expertise with structured procurement development, agricultural businesses can shift from reactive buying to strategic value creation.
“In a market where margins are tight and volatility is constant, that shift isn’t optional - it’s essential for long-term resilience and profitability.
“AF’s procurement operation aims to save Members an average of 11.4% on input costs. But the often-overlooked benefit is the risk management function that a professional procurement organisation provides.
“That has been especially clear in recent weeks - from maintaining the flow of timely information and advice, to working closely with suppliers to ensure contracts and pricing commitments are honoured.
“Whether procurement is handled in-house or through a buying group, one thing is clear: with farm input costs rising rapidly, procurement strategy deserves to be at the top of every farm business agenda.”
Kristian Dunham leads procurement strategy for machinery and general inputs at AF. His work focuses on helping agricultural businesses reduce input costs, manage supply chain risk and improve purchasing strategy across complex farm supply chains.
