Chapter 9: Intermediate consumption
Updated 20 February 2024
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Summary
In this summary, all values are provided in current prices which is considered the most intuitive approach for comparisons over a short time period. It should be noted that these values have not been adjusted for inflation, which was unusually high in 2022 at 5.0%. For the current prices dataset please see Chapter 4: Accounts.
In 2022:
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The total cost of intermediate consumption was £22,084 million, an increase of £3,560 million (19%) from 2021 to 2022.
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The value of animal feed increased by £1,690 million (26%) from 2021 to £8,270 million in 2022.
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The value of energy increased by £690 million (48%) from 2021 to £2,138 million in 2022.
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The total value of fertilisers was £2,490 million, an increase of £1,091 million (78%) from 2021 to 2022.
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)
Enquiries: Tim Buttanshaw on +44 (0) 20 8026 3601
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| Year | Intermediate Consumption (£ billion) |
|---|---|
| 2017 | 15.8 |
| 2018 | 17.0 |
| 2019 | 17.1 |
| 2020 | 16.8 |
| 2021 | 18.5 |
| 2022 | 22.1 |
Download the full Intermediate consumption dataset
Figure 9.1 shows the value of intermediate consumption from 2017 to 2022. Since 2017, the average value of intermediate consumption has been £17.9 billion, with the lowest value of £15.8 billion occurring in 2017 and the highest value of £22.1 billion occurring in 2022, an increase of £3.6 billion (19%) from 2021.
Animal Feed
Table 9.1 Animal feed (thousand tonnes unless stated otherwise)
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| 2020 | 2021 | 2022 | |
|---|---|---|---|
| Compounds: | |||
| Cattle | 5,033 | 5,078 | 4,991 |
| Calves | 278 | 277 | 260 |
| Pigs | 2,247 | 2,343 | 2,263 |
| Poultry | 5,170 | 5,209 | 4,826 |
| Sheep | 846 | 898 | 861 |
| Total compounds plus imports less exports | 13,532 | 13,681 | 13,077 |
| Straight concentrates | 7,036 | 6,939 | 6,153 |
| Non-concentrates | 525 | 525 | 525 |
| Inter/intra farm transfer | 9,479 | 8,941 | 8,738 |
| Total all purchased animal feed | 30,571 | 30,086 | 28,493 |
| Value of purchased animal feed (£ million) | £5,732 | £6,580 | £8,270 |
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. There may be minor discrepancies between values presented here and those in Chapter 4: Accounts because of data updates since the UK Accounts were computed.
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) before rising steadily since then to reach a peak of 30.8 million tonnes in 2018 before falling to 28.5 million tonnes in 2022. 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 26% between 2021 and 2022 to £8.3 million and the total volume of all ‘purchased’ animal feed decreased by 5.3% to 28.5 million tonnes. Total compound feed production decreased by 4.4% with decreases in poultry (-7.4%), calves (-6.1%), sheep (-4.1%), pigs (-3.4%) and cattle (-1.7%). 2022 has been one of the most challenging years for the pork sector, with negative margins leading to a significant drop in the breeding herd. Last year’s backlog of pigs to slaughter has cleared which temporally increased demand as the pigs grew bigger and therefore needed additional feed. The poultry industry faced challenges of squeezed margins from high costs and the impacts of Avian Flu.
2022 saw the price of commodities rise; the Russia / Ukraine conflict caused disruption to the supplies of key cereals and oilseeds; Prices peaked in the summer before slowly falling towards the end of the year (albeit still higher prices than 2021). The ruminant sector is likely to have maximised forage and grass to help keep feed costs down.
Defra June 2022 Survey results showed a 1.0% decrease in poultry to 188 million birds. Broiler numbers saw a decrease of 0.5%, to 126 million and the breeding and laying flock fell by 0.5% to almost 53 million The total number of pigs in the UK decreased by 2.5% to 5.2 million animals. Breeding pigs decreased by 15%, while fattening pigs decreased by 1.1%. Sheep and lambs showed increase by 0.3%, to just over 33.0 million. The female breeding flock increased by 1.0% to 15.8 million whilst the number of lambs saw little change and remains at 16.4 million whereas the population of cattle / calves showed little change at 9.6 million.
Besides compound feed usage there was a decrease of 11% in purchased straight concentrates and a 2.3% decrease in inter/intra farm sales.
Oil Prices
Figure 9.2 Annual Europe Brent Spot Price
Enquiries: Tim Buttanshaw on +44 (0) 20 8026 3601
Email: [email protected]
Text description for Figure 9.2: Figure 9.2 is a line chart showing the Europe Brent Spot Price from 2000 to 2022. Values are presented as $per barrel.
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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 financial 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.
This increase of 69% from 2020 to 2021 was followed by an increase of 42% to see oil prices at $101 per barrel in 2022. Russia’s invasion of Ukraine in February 2022 had a significant impact on the import of crude oil to Europe, with the volume of Russian oil decreasing throughout the year from approximately 28% of total imports in January to 4% in December. This decrease in volume coupled with uncertainty of supply saw oil prices peak in July 2022 at $122 per barrel before stabilising throughout the year as dependency on Russian imports decreased.
For more information on European oil prices see this eurostat article: Crude oil imports and prices: changes in 2022
Energy
Figure 9.3 Energy (in real terms)
Enquiries: Tim Buttanshaw on +44 (0) 20 8026 3601
Email: [email protected]
Text description for Figure 9.3: Figure 9.3 is a line chart showing the value of energy in real terms from 2000 to 2022. Values are presented in millions,
Download the full Intermediate consumption dataset
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 the highest cost since 2000 in 2012 before falling in 2013, 2014 and 2015. From 2015-2021 energy costs have averaged £1,441 million (in real terms), but with some relatively large year on year fluctuations.
In 2022 the total cost of energy was £2,138 million, an increase of £690 million (48%) from 2021 at current prices. This value of energy is the highest in real terms since the dataset began in 1973 and is the first time that, in real terms, energy costs have been over £2,000 million. This was mainly driven by an increase in motor and machinery fuels of £449 million (49%) to £1,371 million. Similarly, electricity and fuels for heating increased in 2022, rising by £240 million (46%) to £767 million. This is reflective of the wider UK energy crisis, which has been further impacted by the war in Ukraine. There was a slight reduction in volume, primarily in electricity and fuels for heating, as less drying of crops was required due to warm harvesting weather.
For the full current prices and real terms dataset see Chapter 4: Accounts
Fertilisers
Figure 9.4 Fertilisers (in real terms)
Enquiries: Tim Buttanshaw on +44 (0) 20 8026 3601
Email: [email protected]
Text description for Figure 9.4: Figure 9.4 is a line chart showing the value of fertilisers in real terms from 2000 to 2022. Values are presented in millions,
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). The cost of fertiliser then dropped in 2009 by 21% before rising in 2010 and in 2011 when it reached the highest cost in real terms since 2000. 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 an increase of 53% from 2020, more than bouncing back from the sharp decrease which had been seen in 2020.
2022 saw a dramatic increase in the cost of fertilisers, with an increase of £1,091 million (78%) (at current prices) from 2021, to £2,490 million, the highest value in real terms since 1986. 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 as a result of reduced production. There was also a 4.5% increase in the volume of fertilisers used in 2022, due to a return to more fertiliser intensive winter sowing.
Other Input Costs
The cost of seeds in 2022 was £748 million, a decrease of £64 million (-7.9%) from 2021. Seed usage is driven by a combination of crop area, time of drilling, and drilling conditions. For crops planted in spring 2022, seed rates decreased as a result of good drilling conditions, which enabled crops to be sown during optimal time windows without needing to increase the seed rate. The area of spring 2022 crops also decreased from 2021 due to an increase in winter cropping (planted in autumn 2021), with a 13% reduction seen in the area of spring barley. Favourable weather conditions also led to a slight increase in winter crop areas in autumn 2022 from 2021.
The cost of plant protection products in 2022 was £967 million, an increase of £87 million (9.9%) from 2021. This increase was largely driven by a 10% increase in average unit value across plant protection products, which offset a weighted decrease in usage of 0.4% from 2021.