Rising costs adding to the growing woes

While Asia predicted input costs to drop slightly in 2023, various factors led to an increase putting strains on farmers across the world.

Eurostat published their results for the first quarter of 2023 showing ongoing price increases for agricultural commodities and the rise continued through the year due to natural disasters and the Russian-Ukraine war. The organisation said that due to the breakout of the avian influenza and the shortage of feed grain from Ukraine the price of eggs shot up by about 60%.

Eurostat said in their report: “Farmers have to make purchases of goods and services to be used as inputs in the production process. Whilst output prices continued to rise between

Q1 2022 and Q1 2023, so too did the average price of goods and services consumed in agriculture (that is, inputs not related to investment) in the EU as a whole. They increased by 11% for the same basket of inputs.”

The EU said that the highest rates of increase in agricultural output were in Spain and Portugal due to droughts. The union said that the highest rates of average price inputs costs were in Hungary, Poland and Slovekia while the Netherlands was the lowest.

In the US, the USDA reported that farmers spent the most money on feed, labour and poultry/livestock purchases.

The department predicted the same rising costs in 2024 in the agriculture sector. Other figures of note, said the USDA was in interest expenses, which increased significantly and this is due to debt and the fluctuations in interests rates, this includes farmers housing and labour dwellings.

“Fertiliser expenses (including lime and soil conditioner expenses) are projected to have the most significant decline in nominal terms from 2022, falling $5,2 billion (R98 billion), 14,1%, to $31,7 billion (R600 billion) in 2023. The projected drop is driven by reductions in fertiliser prices,” said the USDA.

With the decline in fertiliser cost expected to continue in 2024, the USDA said that their current projections show an increase in seed costs, labour, machinery and equipment. The department said that their outlook for 2024 and projected increases are driven by the Russian war in Ukraine and the impact this has on fertiliser and feed prices.

The EU said agricultural sector in the continent faces the same challenges.

“EU farmers’ resilience continues to be challenged, with still above-average input costs, although energy and fertiliser prices have started to come down since last autumn’s edition.

“High commodity prices last year helped countering high input costs and the first estimates indicate an increase of the EU average farm income, with significant sectorial and regional disparities,”the EU said in a statement.