Agricultural prices are notoriously volatile, so to get a good handle on the fundamental price trends, you need to take a longer view. So, I’ve been looking at monthly price developments for the major farm commodities (milk, cattle, cereals, pigs, sheep and potatoes) from January 2020 up to recently.
Over the whole period, it’s probably not surprising that month-on-month cattle prices from January 2020 up to last March rose the fastest at over 100%. Potatoes were second at 81%, followed by sheep at 65% and milk at 55%. Monthly cereal prices have increased by 42%. The rear spot is held by pigs which only increased by under 7%.
Of course the increases over the full period mask the fluctuations that occurred in the intervening period.
Milk prices experienced three distinct phases. From January 2020 to December 2022, monthly prices increased by about 100% – they then tumbled by 44% to October 2023 before increasing by 47% since then.
Cattle prices, on the other hand didn’t fluctuate much. Between January 2020 and October 2024 monthly prices increased by around 45% before lifting off by almost 40% in just five months since then.
Between January 2020 and October 2024 monthly prices increased by around 45%.
Cereal prices grew on a monthly basis by 108% in the period January 2020 to August 2022 but fell by 32% since.
Sheep month-on-month prices displayed a steady increase over the last five and a quarter years with relatively short-lived fluctuations off trend.
Potatoes displayed a fairly stable price pattern up to August 2023 before jumping dramatically in the subsequent months.
Pig prices fell steadily up to March 2022 by about 27% before rising by 46% since.
But to assess the likely impact of any change in product prices on margins, we must look at the corresponding developments in input prices.
In the case of milk, in the first phase when prices increased dramatically, these were substantially offset by a massive increase in fertiliser prices during the same period (+162%), and substantial increases in feed prices (+55%) and energy prices (+39%).
In the second phase when milk prices fell, this coincided with a sizeable reduction in fertiliser prices (-45%) and a smaller fall in feed prices (-15%) and fairly stable energy prices. In the recent phase of price recovery, feed and energy prices fell by about 8% and 11% respectively, while fertiliser prices have held steady.
Fertiliser price increase
The steady rise in cattle prices from January 2020 up to October of last year was offset by fertiliser price increases of about 31% and feed prices of 20% and energy prices of a similar magnitude. The recent lift in prices, however, coincided with no great change in either feed or energy prices and a relatively modest increase in fertiliser prices of around 12% over the same period.
The substantial change in cereal prices up to August of 2022 was significantly offset by the 157% increase in fertiliser prices and the 50% increase in energy prices during the same timeframe. On the other hand, in the subsequent period when cereal prices declined, this was compensated to a degree by a sizeable fall in fertiliser prices (-43%) and a lesser decline in energy prices (-9%).
When monthly pig prices were falling up to March 2022, feed and energy prices increased by over 30% and 50% respectively. When prices subsequently recovered, both feed and energy prices fell.
When monthly pig prices were falling up to March 2022, feed and energy prices increased.
The steady increase in sheep prices that has been recorded over the last five and a quarter years was comfortably in excess of the increase in fertiliser (+46%) and energy prices (+36%).
The modest price lift received by potatoes from January 2020 to August 2023 of just 13% was substantially offset by about a 45% increase in fertiliser and energy prices. When prices took off subsequently, fertiliser prices were fairly stable and energy prices fell by nearly 7%.
Consumer prices
Over the same period, it’s also worth looking at what’s been happening to consumer prices.
Consumer prices tend to be much less volatile as the multiples smooth over significant peaks and troughs in the prices they pay farmers.
Butter prices have increased by almost 50% since January 2020 which is not too far off the increase in farmer milk prices.
However, butter prices did not follow the substantial hump in milk prices from early 2021 to late 2023.
Cheddar cheese prices on the other hand, hardly increased at all (+11%) over the full period.
Bread prices grew by about 27% over the last five and a quarter years, which was well behind the lift in cereal prices of 42%.
Also, like butter prices, bread prices did not follow the hump in cereal prices from August 2021 to August 2023.
I was a bit surprised by the behaviour of consumer beef prices, which have hardly changed at all since January 2020, given the price hike for a good steak in restaurants in the recent past.
Agricultural prices are notoriously volatile, so to get a good handle on the fundamental price trends, you need to take a longer view. So, I’ve been looking at monthly price developments for the major farm commodities (milk, cattle, cereals, pigs, sheep and potatoes) from January 2020 up to recently.
Over the whole period, it’s probably not surprising that month-on-month cattle prices from January 2020 up to last March rose the fastest at over 100%. Potatoes were second at 81%, followed by sheep at 65% and milk at 55%. Monthly cereal prices have increased by 42%. The rear spot is held by pigs which only increased by under 7%.
Of course the increases over the full period mask the fluctuations that occurred in the intervening period.
Milk prices experienced three distinct phases. From January 2020 to December 2022, monthly prices increased by about 100% – they then tumbled by 44% to October 2023 before increasing by 47% since then.
Cattle prices, on the other hand didn’t fluctuate much. Between January 2020 and October 2024 monthly prices increased by around 45% before lifting off by almost 40% in just five months since then.
Between January 2020 and October 2024 monthly prices increased by around 45%.
Cereal prices grew on a monthly basis by 108% in the period January 2020 to August 2022 but fell by 32% since.
Sheep month-on-month prices displayed a steady increase over the last five and a quarter years with relatively short-lived fluctuations off trend.
Potatoes displayed a fairly stable price pattern up to August 2023 before jumping dramatically in the subsequent months.
Pig prices fell steadily up to March 2022 by about 27% before rising by 46% since.
But to assess the likely impact of any change in product prices on margins, we must look at the corresponding developments in input prices.
In the case of milk, in the first phase when prices increased dramatically, these were substantially offset by a massive increase in fertiliser prices during the same period (+162%), and substantial increases in feed prices (+55%) and energy prices (+39%).
In the second phase when milk prices fell, this coincided with a sizeable reduction in fertiliser prices (-45%) and a smaller fall in feed prices (-15%) and fairly stable energy prices. In the recent phase of price recovery, feed and energy prices fell by about 8% and 11% respectively, while fertiliser prices have held steady.
Fertiliser price increase
The steady rise in cattle prices from January 2020 up to October of last year was offset by fertiliser price increases of about 31% and feed prices of 20% and energy prices of a similar magnitude. The recent lift in prices, however, coincided with no great change in either feed or energy prices and a relatively modest increase in fertiliser prices of around 12% over the same period.
The substantial change in cereal prices up to August of 2022 was significantly offset by the 157% increase in fertiliser prices and the 50% increase in energy prices during the same timeframe. On the other hand, in the subsequent period when cereal prices declined, this was compensated to a degree by a sizeable fall in fertiliser prices (-43%) and a lesser decline in energy prices (-9%).
When monthly pig prices were falling up to March 2022, feed and energy prices increased by over 30% and 50% respectively. When prices subsequently recovered, both feed and energy prices fell.
When monthly pig prices were falling up to March 2022, feed and energy prices increased.
The steady increase in sheep prices that has been recorded over the last five and a quarter years was comfortably in excess of the increase in fertiliser (+46%) and energy prices (+36%).
The modest price lift received by potatoes from January 2020 to August 2023 of just 13% was substantially offset by about a 45% increase in fertiliser and energy prices. When prices took off subsequently, fertiliser prices were fairly stable and energy prices fell by nearly 7%.
Consumer prices
Over the same period, it’s also worth looking at what’s been happening to consumer prices.
Consumer prices tend to be much less volatile as the multiples smooth over significant peaks and troughs in the prices they pay farmers.
Butter prices have increased by almost 50% since January 2020 which is not too far off the increase in farmer milk prices.
However, butter prices did not follow the substantial hump in milk prices from early 2021 to late 2023.
Cheddar cheese prices on the other hand, hardly increased at all (+11%) over the full period.
Bread prices grew by about 27% over the last five and a quarter years, which was well behind the lift in cereal prices of 42%.
Also, like butter prices, bread prices did not follow the hump in cereal prices from August 2021 to August 2023.
I was a bit surprised by the behaviour of consumer beef prices, which have hardly changed at all since January 2020, given the price hike for a good steak in restaurants in the recent past.
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