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Agricultural price index: Farm input costs rise driven by fertiliser
Thursday, 26 February 2026
The Agricultural Price Index (API) reflects the change in the price farmers have paid for goods and services. After the volatility seen in 2022, prices have been more stable over the last few years.
Key points
- In the 12 months to November 2025, the overall API for agricultural inputs increased by 2.4%
- The largest downward contribution to the inflation rate was compound feedstuffs – in January 2025, compound feedstuffs moved below the average rate of inflation of all agricultural inputs and remained so for the rest of the year
- Despite fertiliser price inflation easing previously, in 2025 prices began to rise, caused by tight global supply and increased production costs
Inputs
In the 12 months to November 2025, the overall API for agricultural inputs increased by 2.4%.
In previous years, volatility around the world caused input costs to soar, weighing heavily on farmer confidence and farm profitability.
Throughout 2025, the price index remained relatively stable with the price increasing by 0.6% from October to November.
Figure 1: Agricultural price index for key inputs (2020=100)
Source: Defra
Figure 1 shows price trends of selected key outputs between January 2021 and November 2025, using 2020 as the baseline. Compound feedstuffs = dark blue line, energy and lubricants = green line, straight fertilisers = brown line. The hashed blue line shows the average price of all agricultural inputs. All categories rise sharply in 2022, with straight fertilisers peaking the highest, then all decline and level out in 2023. By 2025, prices for all inputs remain slightly above 2020 levels.
In January 2025, compound feedstuffs moved below the average rate of inflation of all agricultural inputs, this remained throughout 2025.
The animal feed production outlook states that as forage supplies are constrained, nutritionists have been prioritising energy from feed grains which have been under downward price pressure.
Volatility in grain markets quickly impacts the grain price which creates a risk for producers as this cannot easily be predicted.
Fertilisers, along with soil improvers, were a significant driver to the increase in the overall API for agricultural inputs. Despite fertiliser price inflation easing previously, in 2025 prices began to rise again but not to the extent seen in 2022 (see Figure 1).
This price increase is caused by tight global supply and increased production costs.
The fertiliser outlook suggests that the implementation of new legislation and instability in Europe and the Middle East could impact on fertiliser costs which would affect the overall API for agricultural inputs price going forward into 2026.
Energy and lubricants is another driver of change in the agricultural inputs index.
Energy is essential on farms and is an area that is influenced by a variety of external factors, including government policy and price of energy sources.
The price has been stable in 2025 but is still expensive compared to prices seen in 2021.
Easing inflation has created more stability for farm input costs but with unpredictability around the world there is a risk that this could negatively impact markets and increase costs.
With fertiliser costs increasing the cost of production, looking to optimise application using the nitrogen fertiliser adjustment calculator for grassland or cereals will help you create more cost-efficient crop margins.
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