Despite the drop in fuel costs, agricultural purchasing group Anglia Farmers says the overall cost of arable and livestock farming has not decreased significantly in the last six months.

The revelation comes from the latest Anglia Farmers Agricultural Inflation Index figures based on a six-month period to the end of February 2009.

Chief executive Clarke Willis, who presented the new index results to a packed auditorium at the Norfolk Farming Conference on 25 February, said:

“Our figures show that fuel costs dropped by 17.5% during the last six months but overall costs for farming have only dropped by 0.77%. Bear in mind this is from the hugely inflated figures agriculture experienced in the previous 12 months when our index showed the overall costs increased by more than 35%. So it’s clear to see that an overall drop of 0.77% bears little significance. Farming is still a whole lot more expensive than it was 18 months ago.”

The Anglia Farmers Agricultural Inflation Index, devised by Jim Alston - one of the purchasing group’s farmer directors, is based on actual cost change information from the group’s purchasing office on 95 products. The method is similar to that used for the retail price index (RPI) where products are grouped and then weighted.

In addition to the overall AF agricultural inflation index, there are five enterprise sectors for combinable crops, potatoes, sugar beet, dairy and beef & lamb. The enterprise costings show falls and this is because they are more responsive to the direct inputs (see table below). The weighting in these sets has remained consistent throughout and tends to reflect the more current prices to a greater degree than the overall index.

“As the UK’s largest agricultural purchasing group we are turning over around £150 million a year. Buying on behalf of our 1700 members means we need to have an accurate benchmark on costs so when we hear that farming costs have dropped significantly we can base our counter response on real data.”

AF Ag Inflation Figures between August 2008 and February 2009 a) Overall Agricultural Inflation is -0.77% b) Each category of farm expenditure has a different influence on the overall inflation figure Inflation within category Weighted change Seed -4.4% -0.27% Fertiliser 3.5% 0.38% Agrochemicals 4.6% 0.51% Animal Costs 1.2% 0.14% Contract & Hire -1.6% -0.13% Machinery 3.5% 0.52% Fuel -17.5% -0.87% Labour 4.4% 0.62% Rent, Rates, Finance & Property -9.3% -1.67% Overall weighted inflation -0.77% c) By enterprise:                    Cereals& OSR -3.10%                                                   Potatoes -1.12%                                                   Sugar Beet -3.04%                                                   Dairy -1.25%                                                    Beef & Lamb -2.91%