Millers are fearful about the size of the future UK wheat crop, which is likely to decline for political and cost reasons, a trend that could be exacerbated by greater consumer demands concerning sustainability.
For the UK flour milling sector in the season to date (latest December figures), home grown wheat usage was down 18.5 per cent, according to AHDB market intelligence director Phil Bicknell. “This is not surprising given the low production figure in 2020 and also means significant imports to fill that deficit. For the month of December, milling wheat imports were up 115 per cent on last year. We have milled nearly as much imported wheat in first half of this season as in the whole 2020 year,” he added.
Speaking at the AHDB Milling Wheat Week webinar, Mr Bicknell said it was reasonable to assume that there would be a rebound in UK milling wheat. “Plantings are up 18 per cent, while an attractive premium should also drive a reasonable size milling crop.”
However, longer term there are fears over the future size of the UK milling wheat crop. With the average cereal farm currently receiving £40,000/annum in BPS, its loss is potentially critical and environmental schemes will not be a like for like direct replacement for BPS, he said. “Farmers are asking what they will be rewarded for and what effect it will have on bottom line – as yet we are waiting for answers. Some land will be taken out of production and although we may want to think it will be mainly pasture land, we would be naive not to think it could relate to more marginal arable land too.”
Mr Bicknell also highlighted the potential loss of urea, which could increase wheat growing costs by £20/hectare.
George Mason, senior executive at Northamptonshire flour miller Heygates, said: “In the medium term, how farm payments are going to be reduced is putting the fear of God into us [millers]. The area of UK wheat production is only likely to fall. If we get to a situation where a 12-13 million tonne wheat crop is commonplace, with the matrix of demand we have at the moment it will create a deficit every year.”
As farm payments decline, farmers will look more seriously at how much it costs to grow wheat, said Yorkshire farmer Ian Backhouse. “If it is marginal in terms of profit and they can make more profit elsewhere they will do so. A lot is still unknown about Government policy going forward and there is a danger that if it is structured wrongly and the market is working against farmers, some of millers’ fears could be borne out.
“But I wouldn’t want to be overly pessimistic. Farmers are resilient, adaptable and flexible. They will tighten their belts find ways to carry on doing job they love doing. The question will be if the supply chain makes too many demands that add on too much cost at a time when it is getting harder for farmers to produce what they want to produce in terms of quality. This might drive them into looking at alternatives.”
Mr Mason also has concerns about demands on the supply chain concerning sustainability. He said: “Every week we are getting customers contacting us on how we see sustainability and what can be done. The difficulty is a lot of people are asking us about it but not many people are telling us what they want. A definition of sustainability is difficult and while it’s high on the Government’s agenda, our customers aren’t quite so clear on exactly what the future holds. We are trying to bring everyone together to form a common approach to sustainability. The last thing we want is a plethora of schemes which become confusing and burdensome. We want something simple, achievable, workable, measurable and that doesn’t cost a fortune.”