Farmers urged to think more strategically about procurement as war drives up costs |
The war in Iran, and the ongoing disruption to the key shipping channel the Strait of Hormuz, has forced up the prices of key farming inputs including fuel and fertiliser.
Norfolk-based agricultural purchasing co-operative AF Group has reported significant rises in fuel prices, with kerosene up 64ppl, red diesel up 44.5ppl and white diesel up 47ppl.
For fertiliser, AN and urea are up by around 24pc and liquid fertiliser up by around 17pc. AF says suppliers are pricing on a daily basis only, although "the good news is that most products are still available".
Kristian Dunham, AF’s head of machinery and general inputs, said rising costs have made procurement strategy even more important for farmers.
“Farmers understand soil health, machinery efficiency, livestock performance, fuel consumption, weather risk and market volatility in a way few outside the sector ever truly grasp," he said.
“Procurement professionals, meanwhile, are trained to think in terms of leverage, risk exposure, stakeholder influence, supplier power and long-term value.
“These two disciplines often operate in parallel rather than in partnership. Yet the reality is that many people working within agricultural businesses are already practising procurement every day — even if they don’t see themselves as procurement professionals.
“They may describe themselves as buyers at best, but their daily responsibilities include buying fuel, negotiating supply contracts, sourcing fertiliser and managing input contracts.
“Without necessarily recognising it, those decisions shape risk exposure, supplier dependency, margin protection and long-term resilience.
“By combining sector expertise with structured procurement development, agricultural businesses can shift from reactive buying to strategic value creation.
“In a market where margins are tight and volatility is constant, that shift isn’t optional - it’s essential for long-term resilience and profitability.
“Whether procurement is handled in-house or through a buying group, one thing is clear: with farm input costs rising rapidly, procurement strategy deserves to be at the top of every farm business agenda.”