Agflation Update – April 2026

Cost of Farm Squeeze Returns as Agflation Accelerates

Andersons’ latest estimates (March 2026) placing it at 7.6% annually, well ahead of CPI (3.0%) and CPI Food (3.2%).

This comes at a time when prices for agricultural outputs are falling, now 6.5% lower year-on-year. This highlights a clear ‘cost of farming’ squeeze that the sector is now facing.

Agflation is now rising at its fastest rate since early 2022. While levels remain below the peaks seen following the Ukraine invasion, continued disruption linked to the Iran conflict, particularly around the Strait of Hormuz through which circa 20% of global oil and gas flows, still presents challenges for input costs.

In contrast to 2022, when output prices rose alongside costs due to Black Sea supply disruption, current global grain and milk supplies remain ample. As a result, output prices are subdued, intensifying profitability pressure faced by UK farmers.

This is especially evident in fertiliser costs, as around 30% of global urea supply, a key source of nitrogen fertiliser, is constrained by the Strait of Hormuz. The production of ammonium nitrate (another key source) is closely linked with gas prices. This has driven farm-gate nitrogen fertiliser prices to about £500 per tonne (where available). This presents immediate cost pressure, particularly for dairy systems with ongoing fertiliser demand through spring and summer. While most UK arable fertiliser has already been purchased, even with the temporary ceasefire announced on 7^th April, exposure remains for later applications globally, notably in India and Latin America.

Input pressures are not limited to fertiliser. Rising energy costs, including red diesel, are feeding through into machinery and contracting costs. A prolonged conflict would also risk broader inflationary spillovers, raising the prospect of renewed pressure on consumer demand and a wider cost-of-living squeeze. This could create challenges for red meat as prices for beef and lamb have risen markedly in recent years and are now substantially higher than pig meat and poultry meat prices. This points to a challenging outlook for UK farming, with margins under pressure from both sides at a time when support is declining in real terms.

Farm businesses and agricultural professionals doing business with farmers need to be fully informed on the outlook for costs, markets and policy. The Andersons Spring Seminar, recorded at Harper Adams University in March 2026 and now available online, sets out the key drivers of farm profitability and the implications for those advising, supplying to, or procuring from the sector. To access the online seminar, visit: www.theandersonscentre.co.uk/seminars

Figure 1: Andersons Annual ‘Agflation’, Agricultural Outputs & CPI Estimates – 2015 to 2026*

Sources: ONS, Defra and The Andersons Centre

Figure 2: Andersons ‘Agflation’ and UK Consumer Prices Index (CPI) – 2019 to 2026

Sources: ONS, Defra and The Andersons Centre
Notes: Andersons’ Agflation estimates build upon Defra price indices for agricultural inputs and weights each input cost (e.g., animal feed) by the overall spend by UK farmers. Andersons then provides a more up-to-date estimate of the price index and annual inflationary trends for each input cost category.

The Agricultural Outputs index is compiled in a similar manner. Defra price indices for agricultural outputs are weighted based on their overall contribution to UK farming output. Andersons then provides more recent estimates for each output category, with the index, and annual inflationary estimates, being updated as the official Defra data becomes available.

* represents the % change versus the same month a year earlier.

This news release has been sent from The Andersons Centre, 3^rd Floor, The Tower, Pera Office Park, Melton Mowbray, Leicestershire LE13 0PB. For further information please contact Michael Haverty (M:07900 907 902; Email: [email protected]), or Richard King (M: 07977 191 427; Email: [email protected]).