TL;DR:
- The 2024 agri-market outlook indicates significant challenges for farming resilience due to over 30% inflation in agricultural inputs since 2019, alongside market stresses and policy uncertainties.
- Key sectors such as beef, lamb, dairy, pork, cereals, and oilseeds are expected to face varied impacts, with input costs, consumer demand, and global economic factors influencing market trends.
As we step into 2024, the agricultural sector braces for a year marked by continued inflationary pressures and the lingering effects of the cost of living crisis on consumer demand.
The Agriculture and Horticulture Development Board’s (AHDB) latest agri-market outlook sheds light on the cumulative inflation exceeding 30% in agricultural inputs since 2019. This surge, compounded by market stresses and policy uncertainties, poses a significant threat to the long-term resilience of the farming industry.
The report underscores the ongoing challenges faced by markets, food businesses, and consumers grappling with inflation, exacerbated by the energy crisis, the war in Ukraine, and labour shortages.
Recent developments in the Middle East further compound the global economic risks and UK inflation, impacting farmers directly through escalated input costs, including energy and interest rates. This scenario fuels a price-sensitive consumer market, potentially altering food consumption trends in 2024 and beyond.
Sarah Baker, AHDB’s Head of Economics and Analysis, highlights the substantial rise in input costs throughout 2023, particularly fertiliser prices, squeezing farm business margins.
Despite some input costs receding, they remain above pre-inflation levels, with ongoing risks linked to energy markets and global instability. Baker points to market stresses and policy uncertainty, especially concerning emerging environmental schemes and their funding, as additional pressures on long-term resilience.
The outlook provides a detailed analysis across various levy-paying sectors, including beef, lamb, dairy, pork, cereals, and oilseeds, examining trends in farm business inputs and consumer demand. Key findings reveal:
- Beef: Cattle numbers are finely balanced, with concerns over the national suckler beef herd’s long-term direction due to production economics, land access, and agricultural policy.
- Lamb: Domestic production is expected to decline slightly, with import pressures and falling domestic demand amidst cost of living challenges.
- Pork: No recovery in herd or production levels anticipated, with competition from chicken and potential trade uplifts in the USA and Mexico.
- Dairy: Signs of recovery with commodity prices starting to build, though demand remains muted with challenges in import demand from China.
Cereals and Oilseeds: Disruptions in autumn and winter crop areas for harvest 2024, with the UK likely needing to import wheat, amid fluctuating crop and fertiliser prices affecting profitability and cash flow.
The 2024 outlook serves as a crucial tool for farmers and levy payers, helping them plan and budget for the upcoming challenges. With the agricultural sector at a crossroads, navigating through inflation, policy changes, and consumer demand shifts will be essential for sustaining long-term resilience and growth.
