Chapter 9: Intermediate consumption
Updated 21 October 2022
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Summary
In 2021:
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The total cost of intermediate consumption was £18,854 million, an increase of £2,044 million (12%) from 2020.
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The value of animal feed increased by £978 million (17%) from 2020 to £6,710 million.
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The value of energy increased by £170 million (14%) from 2020 to £1,404 million.
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The total value of fertilisers was £1,617 million, an increase of £559 million (53%) from 2020.
Introduction
Chapter 4 provides more detailed information on input costs and gives a full breakdown of intermediate consumption.
Figures 9.3 and 9.4 present the value of energy and fertilisers respectively. These are presented in real terms, adjusted for inflation, which provides more meaningful comparisons over longer time periods. Comparisons over more recent years are presented at current prices, not adjusted for inflation, which is considered the most intuitive for comparisons over shorter time periods.
Inputs
Figure 9.1 Intermediate consumption (at current prices)
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| Year | Intermediate Consumption (£ Billion) |
|---|---|
| 2016 | 15.0 |
| 2017 | 15.8 |
| 2018 | 17.0 |
| 2019 | 17.1 |
| 2020 | 16.8 |
| 2021 | 18.9 |
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Figure 9.1 shows the value of intermediate consumption from 2016 to 2021. Since 2016, the average value of intermediate consumption has been £16.8 billion, with the lowest value of £15.0 billion occurring in 2016 and the highest value of £18.9 billion occurring in 2021, an increase of £2.0 billion (12%) from 2020.
Animal Feed
Table 9.1 Animal feed (thousand tonnes unless stated otherwise)
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| 2019 | 2020 | 2021 | |
|---|---|---|---|
| Compounds: | |||
| Cattle | 4,983 | 5,033 | 5,371 |
| Calves | 249 | 278 | 291 |
| Pigs | 2,123 | 2,247 | 2,508 |
| Poultry | 5,264 | 5,173 | 5,558 |
| Sheep | 783 | 846 | 933 |
| Total compounds plus imports less exports | 13,343 | 13,535 | 14,540 |
| Straight concentrates | 6,914 | 7,038 | 6,525 |
| Non-concentrates | 525 | 525 | 525 |
| Inter/intra farm transfer | 9,939 | 9,479 | 8,922 |
| Total all purchased animal feed | 30,721 | 30,578 | 30,511 |
| Value of purchased animal feed (£ million) | £5,553 | £5,732 | £6,710 |
Notes:
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Compounds poultry: includes poultry feed produced by ‘retail’ compounders but excludes production from integrated poultry units which are included within the straight concentrates data.
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‘Maize for stockfeed’ is included within the ‘inter/intra farm transfer’ category.
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see Chapter 4: Accounts for a breakdown of the value of animal feed.
Download the full Intermediate consumption dataset.
The cost of animal feed is the largest item of expenditure recorded in the production and income account. Usage remained broadly level from 1993 to 2009 (around 25 million tonnes), rising steadily since then to reach a peak of nearly 30.8 million tonnes in 2018 before falling to 30.5 million tonnes in 2021. Despite the broadly increased usage, the value of animal feed used within the agricultural industry has closely followed trends in commodity prices, shaped by exchange rates and world prices.
The total value of all animal feed increased by 17% between 2020 and 2021 to £6.7 billion, while the total volume of all ‘purchased’ animal feed decreased by 0.2% to 30.5 million tonnes. Total compound feed production increased by 7.4%, with increases in pigs (12%), sheep (10%), poultry (7.4%), cattle (6.7%) and calves (4.9%). 2021 saw variable quality of forage due to moisture deficit in spring producing poor first cuts, which improved in second and third cuts as warmer and wetter weather arrived in June and into July. Extended outside grazing of livestock reduced the need to utilise stored forage supplies. The pig sector saw increased usage due to the backlog of pigs for slaughtering. The poultry sector began to recover as demand from the hospitality sector increased, and high lamb prices encouraged producers to use more growing / finishing compound feed during the autumn.
Defra June 2021 Survey results show a 4.4% increase in poultry to 190 million birds, with an increase in broilers (table chickens) offsetting a decrease in the breeding flock. The pig population increased by 5.3% due to a 5.9% increase in fattening pigs. Sheep and lambs showed a small increase of 0.8% to almost 33 million, whereas the population of cattle / calves decreased by 0.1% to 9.6 million. Besides compound feed usage, there was a decrease of 7.3% in purchased straight concentrates and a 5.9% decrease in inter/intra farm sales, caused by a lack wheat availability in the first half of the year from the 2020 harvest and the lower 2021 barley harvest.
Oil Prices
Figure 9.2 Annual Europe Brent Spot Price
Enquiries: Josh Moatt on +44 (0) 20 771 41913
Email: [email protected]
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Some inputs, such as fuel, electricity and fertilisers, are closely linked to oil price. Consequently, oil price plays a role in the increase or decrease of the costs for running machinery and for heating, lighting, drying crops and the cost of fertiliser purchases.
Figure 9.2 shows the trend in annual Europe Brent crude oil prices since 2000. Oil prices rose strongly between 2002 and 2008, but fell sharply in 2009 as a global crisis hit. Between 2011 and 2014, oil prices were high but relatively stable due to a weak global economy and tension in the Middle East.
Into 2015, strong global production exceeded demand, causing prices to fall rapidly, dropping below $45 per barrel by 2016. Prices rose steadily through 2017 and 2018, reaching just over $70 a barrel, amid fears of US sanctions and global shortages. However, the price was still much lower compared to the high prices seen at the start of the decade.
In 2020, coronavirus related restrictions resulted in a rapid contraction in global demand for oil, particularly for travel. This caused the price to fall below $42 per barrel for the first time since 2004. The price rebounded strongly in 2021, as the easing of Covid-19 restrictions globally saw the demand for oil outpace supply. The average price in 2021 was $71 per barrel, slightly lower than the peak in 2018 and still considerably lower than the highest price of $112 per barrel in 2012.
Energy
Figure 9.3 Energy (in real terms)
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Figure 9.3 shows the value of energy usage for agriculture in real terms. Over the long term the value of energy costs has followed a similar pattern to that of the crude oil price (see Figure 9.2). Energy costs steadily increased during the 2000s reaching a peak in 2012. From this peak energy costs fell and since 2015 have averaged £1,362 million (in real terms), but with some relatively large year on year fluctuations.
In 2021 the cost of energy was £1,404 million, an increase of £170 million (14%) from 2020 at current prices. This was mainly driven by an increase in motor and machinery fuels of £142 million (18%) to £924 million. This increase was the result of a 20% increase in the average price of motor and machinery fuels, largely following global fuel price trends. Similarly, electricity and fuels for heating increased in 2021, rising by £28 million (6.3%) to £480 million.
Fertilisers
Figure 9.4 Fertilisers (in real terms)
Enquiries: Josh Moatt on +44 (0) 20 771 41913
Email: [email protected]
Download the full Intermediate consumption dataset.
As the price of oil directly influences the price of energy it also affects the cost of fertiliser. Natural gas is used in the process of manufacturing nitrogen fertilisers and its price is closely linked to the price of oil. Consequently, if the price of oil rises so does the cost of producing fertiliser.
Figure 9.4 shows the cost of fertilisers since 2000 in real terms. Between 2000 and 2007 the cost of fertilisers was largely stable. However, from 2007 to 2008 the cost of fertilisers increased by 78% (in real terms) and remained high until peaking in 2011. Between 2012 and 2019 the cost of fertilisers steadily declined. In 2020, there was a sharp drop in the cost of fertilisers resulting from reductions in prices as well as the volume of fertilisers used.
2021 saw a dramatic increase in the cost of fertilisers, with an increase of £559 million (53%) from 2020, to £1,617 million (at current prices). The main driver of this increase was higher prices, with an average increase in price of 46% across all fertilisers. This price increase was largely the result of higher energy prices raising the cost of manufacturing, coupled with higher demand. There was also a 4.5% increase in the volume of fertilisers used in 2021, due to a return to more fertiliser intensive winter sowing.
Other Input Costs
The cost of seeds in 2021 was £776 million, a decrease of £87 million (-10%) from 2020. This change was the result of a return to more normal sowing practices, following an unusual 2020. 2021 saw favourable conditions for both winter and spring sowing of crops, leading to a return to winter sowing and an 11.4% reduction in the volume of seeds used.
The cost of plant protection products in 2021 was £959 million, an increase of £64 million (7.1%) from 2020. This increase was largely driven by the use of fungicides, which increased in 2021 due to a larger winter cropping and reduction in spring cropping areas. This reflects a return to more traditional cropping practices in 2021, following an unusual 2020 where winter sowing was badly affected by wet weather. 2021 also saw relatively high disease pressure overall. These factors resulted in the use of more robust treatment measures over larger areas, therefore raising the volume of plant protection products used.