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UK grain could face ‘staunch competition’ from Black Sea region post-Brexit

With the Black Sea region standing on the verge of becoming a serious competitor to UK cereals exports post-Brexit, AHDB cereals and oilseeds strategy director Martin Grantley-Smith travelled 1,700 miles across Russia and Ukraine to check out the competition.


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UK grain could face ‘staunch competition’ from Black Sea region post-Brexit #clubhectare

With the potential absence of preferential access to the EU to shift any exportable surplus of grain, the UK would face staunch competition from lower cost producers in order to ‘tap into’ growth markets, according to AHDB cereals and oilseeds strategy director Martin Grantley-Smith.

 

He said: “Whatever the trading environment post-Brexit, we will be sailing into uncharted waters.”


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Mr Grantley-Smith has recently returned from Russia and Ukraine, where he visited farms, mainly run by westerners, grain elevators and exporters, as part of AHDB’s research into the opportunities and challenges faced by the sector post-Brexit.

 

Opportunity

 

He said: “Our first impression, given the opportunity exists to purchase or rent large amounts of land, is that production is in the hands of agri-businesses, not farmers, and much of the investment has come from private entrepreneurs.

 

“In both countries, land and labour costs are very low and there is no shortage of land.”

 

For wheat, about one-third ends up in milling, although it is not grown specifically for milling, but selected out of the total crop based on quality.

 

Mr Grantley-Smith said: “This is the same with barley, where there is a single crop grown and brewers pull out the quality they need.”

 

Costs were reduced due to lack of disease pressure, fertile soils and low fuel and fertiliser prices. Large field sizes also helped with the economical use of machinery.

 

He said: “We saw mono-cropped fields of more than 500 hectares. Soil quality seems more consistent over large areas.

 

“The weather permits a wide range of combinable crop options and there is little, if any, environmental regulation or cost.”

 

Yields

 

However, yields were low at about three or four tonnes per hectare, with farms unable to import western genetics and little development in their own facilities.

 

He said: “The farms are expected to employ large numbers of staff, 250 staff on one farm we visited, and there are many other social costs borne by farms for the local community, such as supporting the school.”

 

Mr Grantley-Smith said they were told production costs were typically at about £80/tonne, down to £50/t for no-till systems.

 

“For the former, accepting there is massive over-manning, this still seems high for what was going on there. From what we were told, it would appear cost of production is less than £50/t.”

 

Mr Grantley-Smith added the opportunities for both countries were great, investment permitted.

 

He said: “More educated staff and better genetics could easily uplift yields to 7-8t/ha.

 

“Russia and the Ukraine should not be viewed as sleepy backwaters. Land is available, providing you understand how to acquire it and build in the cost.

 

“The future of both countries is all down to investment, which is probably more available in Russia.

 

“And while it might be some time off, the potential is there to produce another 20m tonnes in both countries, mainly for export, which could severely threaten world grain prices and consequently impact on UK profitability.”

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