United Kingdom
The International Grains Council (IGC) puts the U.K.’s total grains crop in 2016-17 at 22.5 million tonnes, down from 24.1 million the previous year.
The United Kingdom has an efficient farming sector with larger farms than its neighbors. Its grains crop is largely feed wheat, with imports traditionally used to make up quality for milling, while its oilseed production is dominated by rapeseed, widely grown as part of a narrow rotation that has created agronomic problems for many farmers.

The country’s recent referendum vote to leave the European Union has left the industry in a policy vacuum, with no clear picture of when the E.U.’s Common Agricultural Policy will cease to apply, what will replace it or how the wider political and economic landscape will change. The vote did trigger a sharp fall in the U.K. currency, the pound, making exports from the U.K. cheaper.

The International Grains Council (IGC) puts the U.K.’s total grains crop in 2016-17 at 22.5 million tonnes, down from 24.1 million the previous year. It puts the wheat crop at 14.9 million tonnes, down from 16 million. Barley production in 2016-17 is put at 6.8 million tonnes, down from 7.2 million in the previous year.

Exports vary by year. For 2015-16, wheat exports are put at 2.75 million tonnes, according to figures published by AHDB Cereals & Oilseeds, the industry body funded by a levy on grain. Wheat imports are put at 1.45 million tonnes. It estimates barley exports at 1.9 million tonnes.

The IGC puts 2016-17 rapeseed production at 2 million tonnes, compared to 2.4 million in 2015-16.

Thriving milling industry

The industry body for the flour milling industry is the National Association of British and Irish Millers (nabim), which operates a system of groups for wheat, based on variety, with Group 1 those expected to reach the highest milling specification down to the pure feed varieties in Group 4.

“In 2016, it is estimated that over 1.8 million hectares of wheat will be harvested in the U.K.,” nabim says in its “U.K. Flour Milling Industry 2016” publication. “Approximately 40% of this area is varieties with bread or biscuit-making potential (nabim groups 1-3).”

It explains that most of the wheat used by millers is grown in the U.K., but that supplies of milling wheat also are sourced from other countries, with Germany, Canada, France and the U.S. being the leading suppliers.

“In recent years the industry has seen an expansion in capacity with several new mills being built,” it said. “There continues to be consolidation so that there are now 30 companies operating 49 mills. The four largest companies account for approximately 65% of U.K. flour production with a further 10 companies producing significant quantities of flour.”

Its estimate for U.K. flour production in 2015-16 is 4.996 million tonnes.

“In 2016, the proportion of U.K. wheat used by flour millers will exceed 80%,” nabim said. “An all-time high of 87% was reached in 2011, with the remaining 13% being imported mainly because it has different qualities used to produce stronger flours that are required by our customers.”

UK flour usage
Source: nabim

Low grain prices

Martin Grantley-Smith, strategy director for cereals and oilseeds at AHDB, said U.K. producers have little effect on the price they receive.

“The U.K. is a pretty small player in the world,” he told World Grain. “We produce about 1.5% of the world’s grain, so we can’t influence the market price very much. Therefore, we have to think about what we can do to improve the profitability of the industry.

“This year with the harvest just coming, we are coming off the back of two very good harvests for ourselves, and that led to quite a surplus of grain in the U.K., a lot of it feed quality grain. The presence of that grain for most of the year has meant that prices have been kept low along with the fact that the world had a lot of grain as well.”

The U.K.’s 2015-16 wheat ending stocks reached 2.7 million tonnes, compared to 2 million a year earlier.

“What can you do with that grain? The livestock industry isn’t going to expand suddenly to take it off our hands,” Grantley-Smith said. “There was always the hope that the energy industry would take a lot of it. If the big players like Ensus and Vivergo were running flat out they would take something like 2 million tonnes of feed quality grain off the market every year, but neither of them have worked flat out up to now.”

Ethanol production in the U.K. has not lived up to expectations. Until it re-opened in July, the Ensus plant in northeastern England had been shut down for 17 months.

The third way of disposing of surpluses is exporting, Grantley-Smith explained.

“The sort of grain we are talking about is feed quality grain, and therefore the point at which it is exported is very much down to its price and that is very much influenced by the strength of the pound,” he said. “Prior to the Brexit referendum, the pound was relatively strong and it wasn’t possible to export very much of our grain. Post-Brexit, the pound weakened considerably and grain exports went at levels that I certainly have never seen before.”

He expected the current rate of exports to clear the surplus in the next few months.

The U.K. industry has worked hard to build a quality assurance system to back its grain sales, but, given that it is selling a commodity on the world market, price is of vital importance.

“An awful lot of it is actually driven by the strength of the pound,” Grantley-Smith said. “It is commodity traded and as the pound remains weak we have a good opportunity to trade more of that grain away. France’s poor crop could give U.K. exporters an extra chance as the new season gets under way.”

To achieve high levels of exports, it’s been necessary to bring more ports, in addition to the traditional shipment locations, into use. Grain is moved internally by truck.

“The problem we have is that our trade isn’t consistent, unlike places like Canada and the U.S., where they have sales every year and therefore they can invest in infrastructure,” he said. “A couple of years ago we didn’t export anything. That’s the problem.

“It’s not just getting the grain to the port that is the challenge, it is finding the grain in the stores in the country. We don’t have a system that regularly allows exporters to find out where the grain is and get ahold of it because it is just not a regular trade.”

Even so, traders do manage to fill the big ships and they do get the grain supplies in. He cited Southampton as an example of a port that may get several hundred truckloads of grain put through and loaded on board ship quickly.

With no influence on prices, and the likelihood that E.U. subsidies will disappear, Grantley-Smith stressed the importance of farmers staying in control of input costs.

“One of the things we have been saying to people is to look at the way you’re buying things like fertilizer and think about what is happening there with that,” he said. “Are there alternative sources at lower cost? You don’t need to go for maximum yield; you need to go for optimum yield. Most farms that are really run as businesses these days are on top of their input costs and where they market and they do make that sort of decision, but there are a lot of farmers still with mixed enterprises where they don’t have the time or the wherewithal to get down to that level of detail, and then they will continue to do what works best for the farm rather than necessarily for the business.”