The impact of extreme weather on the UK’s wheat harvest has captured headlines and highlighted again the challenges for processors, with the country’s milling sector facing difficult decisions around feedstocks, costs and their potential impact for consumers - especially in the most basic of feedstuffs, the humble loaf.
Much of the country’s wheat production is actually of feed wheat and not the precious milling wheat that is essential to flour production. Feed wheat, in contrast, is ground into ethanol or turned into animal feed.
While around 87% of the UK’s milling wheat supply is home grown, the proportion rises to almost 92% for those dependent on feed wheat. Overall milling wheat demand has been declining year-on-year for at least the last four years, according to data from the UK’s Agriculture and Horticulture Development Board (AHDB).
On top of that, the country’s domestic milling sector is already under pressure, with mills closing or consolidating and the door already open to an ever-greater reliance on imports.
In weather terms, this year the UK got all the right conditions… but at all the wrong times. Whatever the cause, shifting climate cycles are leaving a mark on the UK’s fields, along with changing demand patterns from consumers’ appetite for specialty grains, non-meat alternatives and gluten-free options.
Add to that an energy angle through biofuel mandates, changing land use needs and currency fluctuations that reflect an economy hammered by uncertainty, Covid-19 and the imminent departure from the European Union - and the mix quickly becomes overpowering.
On the plus side, the UK entered the year with strong stocks after near-record 2019 production, while Covid-19-related shutdowns have cut ethanol demand and reduced flour demand from the catering sector - a loss that cannot be compensated for by a sudden proclivity for home baking.
“The UK supply situation has not been helped by the situation across the EU, which has - overall - also suffered the effects of a long, hot summer that slashed supply,” Thomas Houghton, senior editor at Fastmarkets Agricensus, said. “A high carryover and big crops from exporters such as Russia and Australia should keep the global balance buoyant, but the headline figures don’t make for pretty reading.”
Post-Brexit, when the UK exits the bloc, the current tariff system - in case of a hard Brexit - will allow the duty-free import of milling wheat from any origin.
Feed wheat imports, however, will come with additional costs that could add to the country’s growing reliance on imports for staples such as wheat and corn, meals and flour.
“The UK wheat market has always pivoted between being a net exporter and a net importer, depending on the season,” Reinout Geyssens, senior editor at Fastmarkets Agricensus, said. “And while the gap in this year’s wheat supply is significantly larger than in recent years, supply should be easily fulfilled by imports because the world is still headed for a global record wheat crop.”