Fertiliser continues to drive agricultural price inflation

Monday, 5 December 2022

Margins for livestock farmers continue to be pressured as prices for key inputs remain at high levels.  While the rate of input price inflation has eased slightly since August for fuel and feed according to the latest Agricultural Price Index (API)[1] data, there have been further increases in prices paid for fertilisers.  Meanwhile, the average price received for all agricultural outputs has decreased since the summer, although there is likely to be variations in output price trends across the various sectors.

Fertiliser prices have seen the steepest increases, with prices paid in September up 9% in the last quarter (Sep v Jun), and 139% higher than a year earlier. The volatility on natural gas markets, combined with rising gas prices has led to some fertiliser manufactures to halt or reduce production, resulting in the UK becoming more dependent on imports, further adding to the costs.

Energy price inflation peaked in July ahead of the Ofgem price cap announcement in August. Prices have eased slightly since then, with the price paid in September sitting 4% below the end of the last quarter (June) but 55% above those from a year ago. It is likely that some of this easing is due to lower demand during the summer months along with government announcement of Energy Price Guarantee for families and businesses at the beginning of September. However, with a higher price cap taking effect from 1 October, and demand increasing over the winter, price inflation is likely to pick up again as the year ends.

Price inflation for compound feed has been less dramatic but still significant, up 37% year on year. With the UK having recorded the tenth driest summer on record,  grass growth between June and the beginning of September was limited. This will have limited forage availability for the winter for many,  leading to increased use of compounds over winter, further driving up production costs.

[1] The Agricultural Price Index (API) reflects the change in the price farmers have paid for goods and services in relation to the base year of 2015.

Image of staff member Freya Shuttleworth

Freya Shuttleworth

Senior Analyst (Livestock)

See full bio

Sign up to receive the latest information from AHDB.

While AHDB seeks to ensure that the information contained on this webpage is accurate at the time of publication, no warranty is given in respect of the information and data provided. You are responsible for how you use the information. To the maximum extent permitted by law, AHDB accepts no liability for loss, damage or injury howsoever caused or suffered (including that caused by negligence) directly or indirectly in relation to the information or data provided in this publication.

All intellectual property rights in the information and data on this webpage belong to or are licensed by AHDB. You are authorised to use such information for your internal business purposes only and you must not provide this information to any other third parties, including further publication of the information, or for commercial gain in any way whatsoever without the prior written permission of AHDB for each third party disclosure, publication or commercial arrangement. For more information, please see our Terms of Use and Privacy Notice or contact the Director of Corporate Affairs at info@ahdb.org.uk  © Agriculture and Horticulture Development Board. All rights reserved.