Farmers' livelihoods 'under threat'

15 August 2008 06:22pm

Farmers could be driven out of business as a result of rising costs, the National Farmers' Union warned.

As figures revealed that farming expenditure has risen by more than a third in the last year, the union also said farmers who are already struggling to make a profit could end up paying for supermarket price wars.

Carmen Suarez, the NFU's chief economist, said any increase in farmgate prices - the money paid to farmers for their produce - was being eroded by rising input prices - the amount farmers have to spend.

"Unless farmers start seeing an increase in farmgate prices that really compensates for the increased costs they will need to consider whether they want to carry on producing," she said. "For farmers this is their livelihood."

Figures released by agricultural purchasing group Anglia Farmers reveal that overall costs on a mixed arable and livestock farm have risen by 35.53% since last September. Its Agricultural Inflation Index measures inflation levels in categories including seed, fertiliser, chemicals, fuel, labour and machinery and weights them according to a farmer's proportional expenditure.

Increases in fertiliser costs account for the majority of the rise, according to Anglia Farmers, with inflation of 156% since September, weighted to 17.16%.

To put the figures into perspective, Jim Alston - a farmer director of Norfolk-based Anglia Farmers who co-ordinates the AF Ag Inflation Index - said that if a 300 hectare farm repeated its purchasing from last year at a cost of £360,000, it would need to find another £120,000 this year from increased sales.

Clarke Willis, chief executive of Anglia Farmers, said: "Our members - and farmers nationwide - rely on this information. Their costs are increasing at an alarming rate and this gives them the only source of accurate data to work with.

"While farmers have seen wheat and malting barley increase significantly in value, even taking into account recent falls, not all crops - such as potatoes and sugar beet - have been so lucky. Feed costs have risen by 44% which will soak up any gains made recently in the market place for milk, beef or lamb. Machinery costs have and are still seeing dramatic rises as any purchaser of plough metal has already found out. All of this will have an on-going impact on what the consumer pays for food."

Dr Suarez said the Anglia Farmers' figures were in line with monthly statistics from the Department for Environment, Food and Rural Affairs. Its latest Agricultural Price Index showed an increase of around 30% between June 2007 and June 2008, she said.

© The Press Association