Agflation on the slide
‘Feed wheat prices – quoted at £213/t – are also down by 6% compared to those in December 2022 and are returning to levels seen this time last year when prices stood at £210/t’ Andersons Consultancy
Agflation is continuing to outpace that of general economic inflation by a massive 7.6%, but it is slowly but surely coming down, albeit with more challenges ahead.
Latest figures from Andersons Agricultural Consultancy, estimate agflation at 18.7% per annum ahead of agricultural outputs at 11.1%. Such figures are, nevertheless, still ahead of the economic inflation rate of 10.5% and the agricultural outputs and food prices figure of 16.8% meaning there is still a gap between the food price inflation that consumers face and the increased input costs that farmers have to manage.
Although Agflation remains higher than food prices, it is declining, having peaked in July 2022, at 26.3%.
According to Richard King and Michael Haverty, of Andersons, agricultural input cost inflation generally surpassed price rises for agricultural outputs throughout the whole of 2022 with the only exception being in October and November when both indices were aligned.
However, throughout December and January, 2023, the agricultural outputs’ inflation rate has more than halved, declining from 22.9% in October to 11.1% today – 7.6% points lower than agricultural inputs’ inflation.
As a result, the farm business advisory consultants team is warning of a challenging period ahead for farmers as the gap between input cost rises on the one hand and output prices on the other continues to widen.
Commenting on milk prices, they said Global Dairy Trade (GDT) auction values, taken as a proxy for global milk prices, have declined by 6% in the past month.
Feed wheat prices – quoted at £213/t – are also down by 6% compared to those in December 2022 and are returning to levels seen this time last year when prices stood at £210/t.
Andersons warned that while general economic inflation looks to have peaked with several commentators forecasting that the inflation rate will decline significantly during 2023, food prices continue to rise.
This is due to the lag between the rates of inflation for agricultural commodities (inputs and outputs) and the inflation rate for food prices, which in the past year or so, has been in the region of six months.
Hence, with agricultural inflation peaking in July, the consultancy team anticipate that the CPI Food index will also peak shortly, if it has not already done so.
Such is the cost of living that new research has found that and increasing number of parents are buying less of the most nutritious foods for their children in a bid to make ends meet.
The work conducted by Red Tractor and You Gov found that 27% of parents are buying less meat and 18% are purchasing less fruit and vegetables. Furthermore, 39% of parents have replaced meat with carbohydrates, such as bread and pasta, in a bid to keep their children full on a tighter budget, the research showed.
Red Tractor, the food chain assurance company, in partnership with data analytics firm YouGov, also found 33% of families with young children are buying what they consider to be lower quality food as they look for cheaper options, compared to just 20% of households without children.
This comes despite parents’ concerns that lessexpensive products may have been produced to a lower quality (55%), have a greater negative impact on the environment (36%) and are less safe (19%).
Meanwhile, according to the Red Tractor and YouGov research, 42% of parents with young children believe the quality of food they can afford will decline further over the next 12 months.