The AgInflation Index is generated using data from purchasing co-operative AF, based at Honingham Thorpe, outside Norwich, which sources more than £300m of agricultural goods every year on behalf of its 3,000 members across the country.
The latest annual figures, for the year ending September 30, reveal an overall average cost increase of 0.77pc compared to the previous 12 months.
Six of the nine categories showed rising costs, with fertiliser up by almost 11pc, contract and hire up by more than 6pc and machinery, fuel and electricity all up by almost 3pc. There were lower rises for rent, interest, property and office – up 0.7pc – while labour costs were up by 0.2pc.
But it was a mixed picture, as prices fell in the remaining three categories, with chemicals, animal feed and medicines, and seed decreasing by 11.2pc, 7.4pc and 1.2pc respectively.
AF chief executive Helen Whittle said: “While there have been good news stories this year, such as rising price of cattle and sheep, and increased value of oilseed rape, this year’s AF AgInflation data shows agricultural input costs continue to creep upwards.
“It’s vital that buying groups such as AF and our members work together to maximise savings on cost of inputs. The economies of scale and market share that come from combined buying power are hugely valuable tools, particularly in the price negotiations our team of specialists has with suppliers.”
AF chief agricultural officer John Barrett said rising arable costs, combined with falling crop prices, added up to a “profound” impact on many farms’ profits.
“While the crop inputs AgInflation figures seem quite modest, if you look at how much the value of crops such as wheat and sugar beet has decreased, combined with increased costs of production, the impact to farmers is profound,” he said.
“From November 2024 to November 2025 feed wheat is down 7pc, milling premiums are down 66pc, feed barley is down 12pc, and malting premiums down roughly 50pc. Sugar beet is down 7.5pc from last year to current year and a further 15pc for the crop to be lifted next year.
“For the 2026 harvest, we’re looking at seed costs down 15pc. At the same time, we are seeing an increase in use of home-saved seed to reduce costs. Meanwhile, we’re forecasting a continuation of ag deflation in crop protection.
“Nitrogen fertiliser costs have risen by 18pc since the start of the fertiliser season, putting up costs for wheat in 2026 by around £26/ha.
“The end result of all these factors combined? AF’s responsibility to bring value to our membership is even greater than ever, when farmers are anticipating a year of even greater financial pressure.”
The AgInflation figures show the gap between farm input costs and retail food prices has narrowed very slightly, with the total food Retail Price Index (RPI) rising by 5.2pc over the same one-year period.
The data also reveals the varying impacts on different types of farming enterprises.
The cost of growing cereals and oilseed rape increased by 1.46pc, while the RPI for bread and margarine has increased by 0.2pc. AF says: “The increase in variable costs and yields in many areas depressed by the weather of 2025 will not alleviate financial threats to overall margins.”
Adverse weather also created difficult conditions for potatoes, whose production costs increased by 4.8pc in the year to September 2025, while the cost to shoppers for stored and new potatoes decreased by 0.4pc, according to the RPI.
Sugar beet production costs increased in the year to September 2025 by 3.97pc – a ten-fold increase on the previous year. Meanwhile the price of granulated sugar in the shops decreased by 3.4. AF says the convergence of these two factors, and the reduction in factory price for beet has “put pressure on the viability of beet production for some growers”.
The cost of dairy farming was helped significantly by a 7.4pc drop in feed and medicine costs to contribute to a small overall deflation of 0.81pc. And the beef and lamb sector also saw a small 0.44pc reduction in production costs, while retail prices for minced beef and lamb increased by nearly 10pc over the same period, says the report.
Warning of energy charge hikes
Farmers and rural businesses have been warned to expect a price hike in the fixed charges on their energy bills.
Barry Crossan, AF’s head of utilities strategy and data analytics, said: “While wholesale cost of electricity has remained relatively flat in the last 12 months, and forward markets currently look equally stable at similar to slightly lower levels, this is the only good news.
“Delivered cost of electricity will increase due to a sizeable uplift in the non-commodity costs, with higher-than-expected increases in projected costs of maintaining and upgrading grid structure to deliver on government renewable generation targets.
“We estimate these fixed charge increases will range between 60-130pc on a like-for-like basis and will be seen in fixed charges on business electricity bills from April 26. If your electricity supply is also reassessed and allocated to a higher band (based on recent historic usage or capacity arrangements) this further ramps up fixed costs.
“Spread across a very large consistent annual consumption the percentage increase in kWh cost will be less significant but for smaller and more seasonal usage the increases will be considerable.”