Massive cost rises could see Cumbrian farmers struggle to stay in business

And the tsunami of escalating prices could mean further price rises in shops - and even food shortages.

Farmers are paying sky-high prices for fertiliser, fuel, energy and feed, and some agricultural sectors could be facing labour shortages again this year, as a result of Brexit and Russia's invasion of Ukraine.

Farmers in the county are facing a perfect storm. An unprecedented rise in the cost of fertiliser is already having 'massive implications' for farmers' production capacity.

Wigton dairy farmer and National Farmers Union (NFU) Cumbria County Chairman, Ian Bowness, told a meeting of farmers that he had been quoted 120ppl for red diesel - three months ago that price had been 60ppl.

Mr Bowness said he had been limited to purchasing 500 litres. "I can get two days done of that amount and then I'll have no diesel on the farm," he said.

Fellow Cumbrian farmer and Red Tractor chair, Alistair Mackintosh, said last year he had paid £270/t for fertiliser and is currently forking out £970t. "My gas bill was £200 and is now £700 and red diesel has jumped from 60p to 170p.

"We need support from Government to see farmers through this crisis. This will not stop when the war ends, it has long-term implications and farm businesses are already facing cash-flow challenges," said Mr Mackintosh.

CONCERNS: Alistair Mackintosh, farmer and key figure in the NFU and Red Tractor farm assured standards organisation. Picture: Stuart Walker

Eden Valley dairy farmer and vice-chair of farmers' co-operative, First Milk, Robert Craig, laid out the price rises in stark terms.

"Last spring fertilizer was around £230/£250 per tonne; due to the spiraling cost of gas fertilizer prices had already risen by almost 100 per cent by late summer/autumn 2021," he said.

"Early in the new year prices rose again to around £600/t and since the war in Ukraine we've seen another £300/t added meaning typically fertilizer is now costing around £1000/t delivered on to farm."

Spiralling costs: Robert Craig, dairy farmer and vice-chair of First Milk

"Diesel and fuel - Spring 2021 typically around 55p/litre for red diesel, again prices strengthened towards the end of 2021 to 70/80p/l and once the war started prices topped £1/litre but had fallen slightly back into the mid 90p's.

"Electricity - Depending when contracts get renewed and the old tariff, electricity costs are going up by anything from 70 per cent to 100 per cent or even more if leaving a low contract.

"Feed - This is the real shocker for many. Prices reasonably stable until the war broke out. Since then its very difficult to get an idea of where prices will stabilize long-term.

"Again depending on how hedged farmers are, prices are typically going up by as much as 60 per cent driven by the availability of wheat, protein and other cereals from Ukraine and Russia, organic feed is by far the worst effected."

'I fear many will decide to leave farming altogether'

But it is not just cost of production inflation that farmers are having to cope with. At the same time they are experiencing significant changes in the government support payment structure which many have become highly dependent upon.

"Coupled together, cost increases and support in decline I fear many will decide to leave farming altogether, especially those businesses with no succession or those already struggling to find and retain staff," added Mr Craig.

"Government seems oblivious to this and is determined to push ahead with change, pulling the security from many businesses at a time when confidence is already very low and with little opportunity for businesses to replace this vital funding with sufficient replacement environmental funding."

Worried NFU chiefs put together a briefing to be heard in a Westminster Hall Debate on Food Security, yesterday calling for more support for farmers, including halting the phasing out of farm payments for two years... but Cumbrian farmers believe that this is something government will not agree to.

PERFECT storm: Adam Day, MD of The Farmer Network

Adam Day, MD for The Farmer Network, based in Penrith, went as far to say that government wanted rid of farms. "Backtracking on farm payments is at the bottom of the government's list.

"Half of the Basic Farm Payment has gone. The goverment's ELMs is not anywhere near being ready to kick-in. Farmers are just waking up to this.

"Stock will begin to flood the auctions and push prices down, and in a few months there will be less on the market. The feedback at auction is some farmers will not be reinvesting, while one beef farmer told me he was cutting his herd by 50 per cent."

He added: "There is going to be a massive wipeout of huge sections of the farming community. There will be no food and we will go hungry. That is coming. You need fertiliser to grow quality food. It is a perfect storm."

Richard Rankin, CEO of H&H Group PLC

Richard Rankin, CEO of H&H Group, said in a statement while he supported the move to more eco-friendly farming, it could not come at the cost of food security. "At a time when costs of production are rising and global supply chains are unreliable, diminishing or of lower quality and standards than we can produce ourselves, is now really the time to reduce the incentive to grow our own, high-quality food?

"And investing into our own food production does not have to be mutually exclusive from investing into improving the environment.

"A fresh look is needed at priorities to address food security as well as making the right steps towards a greener and cleaner planet.

"Let’s not blindly stumble down a path which will be difficult to come back from – press pause and let’s consider investing into what we’re already good at – growing great, high quality and sustainable food for the UK."

Farm chiefs are also calling for banks to give a 'flexible' approach, and provide repayment holidays or defer repayments without penality to free up cashflow to manage extreme volatility.

Brian Richardson, Head of Agri Virgin Money, said “We have seen a period of higher input prices which has very much been accelerated by the tragic events in Ukraine and Russian Sanctions.

"As we move into a busy period for farmers, these increases will come to the fore putting strains on farm budgets and cashflow.

"As always with farming, output prices are slow to react but there will need to be some price realignment to cover these increased costs.

"We have had a period of relatively good prices in the sector meaning better returns, but these will be quickly wiped out through increased costs if output prices do not go up.

"It is essential farm business take a good hard look at the implications of higher costs, look to adjust their business, for example reviewing fertiliser plans and possibly undertaking soil testing to better understand nutrient requirements of their land, and to forecast likely effects on their cashflow.

"Banks do recognise the volatile nature of the sector and that it is a long-term business, so if your requirements for cash change, do talk to us at an early stage so we can talk through any requirements in good time.

"With a plethora of other changes happening in the sector, including a new support regime being rolled out alongside the challenges of preparing for Net Zero, planning is more important than ever.

"It’s vital to understanding how your business will operate in the future, so talk to your advisors and discuss how your farm will approach that journey alongside dealing with the shorter-term challenges we are seeing.”