We’re in for a challenging year: rising input costs – or ag-inflation – are set to remain a key concern for farmers during 2023, say experts.
Higher costs in some areas appear ‘baked in’, say farm consultants Andersons, who forecast a sobering year ahead, with no signs that energy prices are going to decrease while conflict continues in Ukraine.
At the same time, prices in some sectors are weakening. Global markets are adjusting to restrictions on Ukrainian grain shipments and faltering consumer spending ahead of an expected economic downturn.
So what does all this mean? Should we even dare venture beyond the farm gate?
Well, Andersons forecast that 2023 will see UK farm profits drop by up to a third – not the sort of news anyone wants to hear at the start of a new year when it is customary to look to the future full of optimism.
This would put profits back at levels last seen during the tough years around the turn of the millennium. But it is important to point out that the forecast looks only at the aggregate position for UK farming as a whole, not at individual businesses.
Some farm businesses will clearly do better than others. Andersons says there will be huge differences between sectors – and indeed individual farms – depending on how input costs and output prices interact.
It should also be noted that things do change – sometimes unexpectedly. A year ago, few people would have predicted that 2022 would see Russia invade Ukraine, three UK prime ministers and the death of Queen Elizabeth II.
We should remember too that farming is a long-term business. Yes, the immediate future looks challenging, but as Andersons points out, farming has faced difficult times before and has come through them.
The desire to grow good crops, raise healthy livestock, look after the land and pass something worthwhile to the next generation is something to be celebrated. We wish you all the best for 2023 and beyond.