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United Kingdom Agribusiness Report Q2 2011


United Kingdom Agribusiness Report Q2 2011

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Additional Information
Price $530.00
Meta Description No
Publisher Business Monitor International
Date of Report Mar 24, 2011
Quick Overview
BMI View: UK agricultural industries face a number of challenges in the present environment. The dairy industry continues to decline, as farmers continue to receive less than cost price for their product from retailers. The EU Broiler Welfare Directive has come into effect, and has forced producers to reduce stocking densities. And the government's austerity programme is hitting consumers in their pockets and reducing demand for meat. Nevertheless, the UK is a dynamic market, and we expect businesses to fare better than those in most other EU countries.
Key Views
?? In 2011, winter wheat plantings took place at a time when wheat prices had reached near-record highs. Production in 2010/11 to rise 3.9% year-on-year (y-o-y) to reach 15.5m tonnes, in line with rising acreage.
?? With wheat plantings increasing, we expect barley acreage to suffer. We forecast production in 2010/11 to fall to 5.18mn tonnes, down 1.4% y-o-y.
?? 2011 has seen a disastrous sugar beet campaign, after British Sugar decided to close factories, delaying planting. Then, winter frosts destroyed significant amounts of the crop. Production to fall 7.3% to 1.1mn tonnes in 2010/11.
?? In 2010, we estimate Britons consumed 288,000 tonnes of rice, down slightly on the previous year as the recession forced consumers to cut back on ready-to-eat and Asian restaurant meals. In 2011 we expect consumption to recover, rising 2.9% to 296,000 tonnes.
?? In 2011 we forecast poultry production to rise 0.36% to 1.57mn tonnes. By 2015, we expect production to reach 1.60mn tonnes, up 1.86% over the forecast period.
?? In 2011, although we expect growth in beef production to continue, rising feed prices and a reduction in demand due to austerity measures are likely to slow expansion down. In 2011, we are forecasting production of 922,000 tonnes, up 2.8%.
Industry developments
The EU Broiler Welfare Directive was finally implemented in the UK at the end of 2010 after much debate. The regulations came into force on November 5 in Scotland, on November 10 in Wales and on December 23 in England. The legislation, which was passed into European law in 2007, sets maximum levels for the stocking of broiler chickens. Operators stocking above 39kg/m2 will have had to decide whether to increase the size of their facilities to reduce density or to trim the size of their flocks.
In February 2011, the National Farmers Union (NFU) released the results of a study into the cost of milk production in the UK. The report concluded that British farmers were on average losing more than GBp3 for every litre of milk they produced. The losses totalled GBP330mn per year. The report pointed to production cost rises as part of the problem. George Jamieson, a milk policy advisor from NFU Scotland, said the global markets for dairy products were 'flying' and questioned why UK producers were not sharing in the benefits.
Investment firm Future Capital Partners is in the process of raising GBP220mn for a huge bioethanol plant in Grimsby to be run by biofuels company Vireol. The proposed plant would have a requirement for 530,000 tonnes of feed wheat a year, producing 200mn litres of bioethanol and 175,000 tonnes of a highprotein animal feed called dried distillers grains with solubles (DDGS). It is expected to be in service by late 2013.
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