The news Oatly UK were planning to open a UK factory could open up new opportunities for arable farmers
Oatly UK’s announcement it will open a UK factory using British oats could be an opportunity for arable farmers in the right location as oat production was expected to continue to increase.
The dairy alternative brand has announced plans to open its first UK factory in Peterborough in the first quarter of 2023.
Oats will be sourced locally across the UK and the factory will supply the UK market.
The Swedish firm, which was heavily criticised for ’shaming’ consumers who drank cows’ milk in a recent advertising campaign, placed an emphasis on sustainability, using renewable energy and decreasing its energy consumption, water consumption and waste.
The new factory will be able to produce 300 million litres of oat drink per year at launch, with the capacity to grow to 450m litres.
Ishen Paran, general manager at Oatly UK, said: “The UK is a really important driver of the global plant-based movement, with a growing demand for Oatly across the country, and we are excited to supply this increased demand."
James Webster, AHDB senior analyst, said rough calculations suggested this could be about 30,000 tonnes of oats required, or 40,000t after processing losses, increasing to about 60,000t when operating at full capacity.
Oat production has increased as farmers look to oats as an alternative break crop or to combat black-grass, with more than 1mt produced. The UK also has about 54,000t of exportable surplus.
“Looking ahead to next year the early bird survey is anticipating another 2 per cent increase in the area of oats,” he said.
“We imagine a lot of the oats for Oatly will be sold on contract so that will probably add some area into the mix,” he said, adding they would not necessarily clear up that surplus.
“It is not going to be about going out there from a growers’ perspective speculatively growing oats.”
There were also other potential opportunities in the plant-based market, but it was a ‘complex market’.
“You are limited to what we can grow in the UK climate, we are probably not going to be growing an abundance of almonds,” he said.
But for some arable farmers there could be opportunities, as pulses displace a lot of the UK oilseed rape area.
“There could be an opportunity there to add a premium,” he said, adding even on a small scale it could be beneficial over selling into feed markets.