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United Kingdom Agribusiness Report Q1 2010
Market |
Agriculture, Farming & Raw Materials |
Report Type |
Market Research |
Country |
United Kingdom |
Published |
4 January 2010 |
Number of Pages |
57 |
Download |
|
Immediate |
|
Publisher |
Business Monitor International |
The UK grains industry is set to receive a massive boost from Europe's largest refinery, which is due to open in Wilton, Teeside in 2010. The refinery will produce around one-third of the UK's enture bioethanol needs by converting 1.2mn tonnes of locally grown wheat into 400mn litres of ethanol per year. The refinery, according to the Ensus Group - which raised the GBP25mn needed for construction - has been constructed in response to European targets to reduce carbon emissions from road transport. Ensus claims that the plant could create up to 2,000 agricultural jobs and produce around 350,000 tonnes of good quality animal feed, which will help reduce EU demand of soy meal, thus reducing dependency on US and South American imports.
Furthermore, wheat growers in the UK have been given a much-needed boost as bread-maker Hovis announced that it has decided to use 100% British-sourced wheat across its entire range. From early 2010, the brand will stop importing wheat from Canada, where it currently sources up to 50% of its requirement to the average tune of GBP18mn (US$29.72mn) - income that will now stay in the British economy. Such an announcement, from one of the country's leading brands, will serve as a welcome tonic to farmers, given the weak fundamentals (at home and abroad, caused primarily by a combination of a large global crop together with a recession-led drop in consumer demand) that seriously eroded profitability in 2009. The UK pork industry has also been successful in its campaign for home country labelling for British food. A particular source of frustration for pig farmers has been the ambiguity of labelling for pork, which fails to inform consumers on the exact origins of the meat, such as 'produced in the UK' tags on imported meat that has been processed in the UK. However, in a new shake-up, pork can only be declared British if, indeed, the pig was raised and slaughtered in the UK. Also, any meat processed in the UK will need to have its origins declared. This represents good news for entire supply chain operations, from farm to fork, giving consumers confidence in the quality product that they are buying, while providing clear and consistent guidelines for producers.
The number of UK dairy farmers has been diminishing throughout the last 10 years. The average farm size has been increasing, however, as smaller players have increasingly left the industry, unable to cope with a higher cost burden against smaller profit margins. Herd sizes have been gradually increasing, growing by over one-third between 2000 and 2008. Despite this, the overall herd had reduced markedly, although milk yields have improved due to better technology and herd management. While there may well be further hard times ahead for the dairy industry in 2010, we feel that the fortunes of farmers may recover sufficiently in 2010. The drawdown of dairy herds in the US - responding to the collapse in global dairy prices through 2009 - has already provided a degree of price support towards the end of 2009 and is expected to continue into 2010. As the global economy returns to health, we expect demand for dairy to improve, while the supportive measures enacted by the EU, such as dairy export subsidies, may be less of a priority.
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