Which dairy farmers are most exposed to high fertiliser prices?

By Kat Jack

Fertiliser prices have been soaring recently, adding yet more pressure to farmers’ margins as they are squeezed by input cost inflation. The impact these recent price increases have on individual farm businesses will be highly dependent on their needs and the timing of their fertiliser purchases. However, on an overall level, some types of farms will be more exposed to an extended period of high prices than others.

Through analysing AHDB’s dairy performance (2018/19 results) data, we can see that fertiliser costs have a varying share of total variable costs depending on farm type. Spring block calvers are the most exposed group, as fertiliser costs make up 11% of their total variable costs. That means a strong increase in the fertiliser price will have the biggest sway on their finances, compared to other calving systems. Similarly, fertiliser makes up 10% of the variable costs of systems that house their cows for 12 weeks or less.

As well as directly impacting dairy farmers buying fertiliser, these costs could potentially also lead to increased feed prices next season, depending on how the situation develops. We have seen some increases in farmgate prices recently, which will help offset some of the cost increases. However, now it is more important than ever that farmers make sure they understand their cost of production, whether they are making the most of their milk cheque, and the balance of cost vs benefits when making any changes.

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