Inflation to hit farm business margins in 2022 


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RISING costs will be crucial to farm business planning over the next six months as high rates of inflation impact the UK agricultural economy, according to the latest AHDB Agri-Market Outlook. 
The aftershocks of EU exit, the economic ramifications of Covid and the ongoing energy crisis, with its knock-on effects on input prices, are all likely to put pressure on bottom lines over the next six months. The impact of these seismic events on the UK economy as a whole was examined in detail, with a particular focus on what the changes could mean for the agricultural industry. 
Sarah Baker, AHDB Economic Strategist, said: “The pandemic has been unusual in economic shock terms both in its speed of onset and its magnitude, as well as it’s uneven impact across the economy as a whole. The agricultural industry has been particularly hard hit in a number of areas, such as the reduction of the food service market or staff absences exacerbating labour shortages in abattoirs and across food processing caused by Brexit. 
“Both Covid and EU Exit have led to the so-called scarring of the economy – those permanent changes that will slow down its ability to return to ‘normal’. These factors can be seen clearly in agriculture, both in supply chain management and in consumer behaviour. Overall, it will be a year of recalibration as individuals and businesses adapt to a new operating environment.”

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