As a country, the UK is a net importer of goods and our exchange rate with our main trading partners, the US and Europe, will have a big impact on the price of these imported goods.  In agriculture, we are also exposed to the price of these goods, especially fertiliser, feeds, machinery and fuel.  It’s not just the price of imports but also the home produced goods that compete with these imported prices.

So when sterling has reduced in value by 20% since June, it makes all of the above imported goods 20% more expensive.  As an example, we need to spend 20% more sterling to get the same dollar value of fertiliser, which like fuel/oil, is traded in dollars.

Since the four above named farm inputs can make up 50% + of agricultural costs, farm expenditure will increase per unit purchased.  This is outside your control.

It is all the more reason that as agri-sale prices increase, you keep on controlling costs by improving efficiency to wasting less, getting more from what you have through better day to day management.
A good practical example is a beef farmer on 75ha who saved 6T of fertiliser last year by using a GPS system on his tractor to eliminate overlap and he would have reduced time and fuel also.  The savings paid for the investment in one year!

Beware as inflation increases in the general economy.  How long will it be before interest rates begin to increase?

For more information please contact Gerard at gerardfinnan@fcgagric.com