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Soaring fuel prices drive increase in input costs for farmers

Brent Crude Oil price increases and the exchange rate have pushed up the price of fuel.



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Soaring fuel prices have driven an increase in input costs for farmers over the year to September 2017 as the price of Brent crude oil and the devaluation of sterling push fuel prices up 11.5 per cent.

 

According to the AF AgInflation Index, all product areas saw price rises with overall input costs increasing 4.92 per cent.


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Cereal and oilseed rape saw the greatest level of inflation at 5.75 per cent, with sugar beet production costs growing 4.63 per cent. Dairy farmers also saw a 3.77 per cent increase.

 

But according to the retail price index, food prices have increased by 2.2 per cent, although granulated sugar rose by 11.5 per cent.

 

AF group chief executive Jon Duffy said fuel was the ‘primary driver’ with Brent crude oil costs increasing from US$46 to US$55.9 per barrel coupled with the devaluation of sterling against the dollar in the first half of the year.

 

Volatile

 

He said: “All in, the global fuel marketing remains volatile with the ever-changing cost of Brent crude oil and the fluctuating exchange rate.”

 

Fertiliser costs also jumped 8.7 per cent, with contract and hire costs growing 8.5 per cent and a 7.3 per cent rise in seed. Crop protection saw inflation of 0.9 per cent.

 

AF fertiliser and seed business manager Chris Haydock said: “The seed rises are down to the increase in grain prices, while the strength of the euro and the US dollar means I cannot see fertiliser prices reducing in the short-term.

 

“Importers of ammonium nitrate have struggled and further increases are expected. Granular urea has risen, while potash and phosphate prices have risen circa £15/tonne over the season.”

 

Mr Duffy added farmers should consider forward fixing fuel costs to manage risk in a volatile market.

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