Poor harvest fuels long-term milling wheat uncertainty
BRITISH milling wheat growing is an often unsung success story, but what is the crop’s future against a backdrop of unpredictable weather and volatile prices, asks Cedric Porter.
Back in the 1960s, two-thirds of the wheat used in British baked loaves was imported, mainly from Canada.
Now, through the dedication and innovation of growers, breeders and buyers, more than 80 per cent of wheat flour used in the UK is grown in the UK.
In the year to June 2012, good availability of quality British wheat meant nearly 90 per cent of the wheat used for milling in the UK was home-grown - the highest rate ever.
However, the overall amount of milled wheat was down, due to a reduction in material used for bioethanol, a figure that is included in milling data by Defra.
But poor weather this year will mean less British wheat is available, with millers turning to imports to deliver the quality they need. The fear is British growers might make another move away from milling wheat in favour of easier-to-grow and less risky feed varieties.
HGCA planting figures already show a 20 per cent drop in the area of Group 1 and 2 varieties between 2009 and 2012 to just 530,000 hectares (1.3m acres) or only 28 per cent of the total wheat area. The difficulties of this year look set to mean even lower plantings for the 2013 harvest.
This year the wet spring and summer mean all crops have suffered, but the quality of milling wheat has been particularly affected. The latest quality estimates from ADAS and HGCA highlight very poor specific weights, with Group 1 milling wheats achieving an average of just 71.6kg/hl, one of the lowest levels in the last 35 years, down 11.5 per cent or 8.2kg/hl on last year, and 7.9 per cent down (or 5.9kg/hl) on the average between 2007 and 2011.
Hagbergs have also suffered, with hagberg falling numbers averaging 255 seconds, the lowest level since 2008, down 17.2 per cent on last year and 8.9 per cent down on the five-year average.
But proteins were up slightly on last year at 13.2 per cent, the highest figure in the last six harvests, and 4.1 per cent up on the five-year average between 2007 and 2011.
It was a similar picture with Group 2 wheats with specific weights and hagbergs down, but proteins holding ground.
“Wet weather and disease pressure in June and July in particular combined to reduce grain weight,” says Jack Watts, senior analyst at the HGCA, adding this year contrasted with last year when specific weights and hagberg falling numbers were exceptionally high.
“The last two years demonstrate that, despite the effort and attention to detail of growers, crop performance is ultimately dependent on seasonal weather conditions.”
Low UK supplies of milling wheat should push prices up, but growers have not been able to fully benefit this year because of a good milling wheat harvest in France, Germany and Scandinavia. Current premiums are around £30/tonne above feed values.
“Premiums have been capped off by imports,” says Mr Watts, adding millers may also import more gluten and other ingredients as well as wheat this year.
The NFU is advising growers to fully understand the quality of their wheat by conducting their own sampling and analysis, and by segregating different qualities in stores if they can.
But it has also criticised millers and merchants for imposing heavy penalties on growers who do not deliver to specification and for a lack of transparency in the tests being carried out, particularly on specific weights.
“We are getting a lot of calls from members who don’t think claims from the millers are justified,” says NFU arable adviser Guy Gagen. “Tests are often carried out on small samples and results not shared transparently.
“There has been a lot of progress made in improving relationships between all members of the milling wheat chain in the last few years, and it would be a pity for trust to break down in what is a very difficult year for everyone.”
Martin Savage is trade policy manager at milling organisation Nabim. He confirms this is one of the most difficult harvest ever and says millers are not trying to make it even more difficult by insisting on over-strict requirements.
“Just 6 per cent of the milling wheat crop meets the required specification,” says Mr Savage.
“That is one of the lowest levels ever. Our members are having to contend with a severe shortage of UK milling wheat. Some are reporting when they are expecting 20 lorries to turn up, only 10 do and the wheat that does turn up needs to be screened, creating further loss of volume.”
Richard Jenner, director of grain products and origination at Openfield, says this year is an exceptionally bad one, and reduced specific weights and lower hagbergs will inevitably lead to reduced flour quality and functionality - and in particular poor loaf volume and structure.
“To ease the pressure on growers we have amended the Advanced Payment Limits available to reflect the yield and quality concerns arising from the 2012 harvest,” says Mr Jenner. He adds it is inevitable some growers will be unable to meet their contractual obligations.
He also says dedicated supply arrangements have really come into their own this year and points to the Warburtons arrangement which sets out variety-specific protocols for Hereward, Solstice, Crusoe and Edgar.
“More of these varieties will have made the grade than is likely to have been the case had the protocols not been devised. It is in seasons such as this that the true value of these arrangements becomes apparent.”
David Neale, business development manager at agronomy company Agrii, believes this harvest could add to the long-term decline of milling wheat growing in the UK if there is not a concerted effort among all in the chain to prevent that happening.
“We have seen strong demand for Group 3 and 4 variety seed this year, but have plenty of Group 1 and 2 seed available,” says Mr Neale. “You can see why growers want to opt for feed and Group 3 varieties. A grower who can achieve 10 tonnes/hectare for feed wheat and sell at a modest £155/t will have a gross margin of £894/ha.
“If he grew Group 1 milling wheat at 9t/ha, his gross margin would be £723/ha at a price of £155/t. The milling wheat would need to fetch a £20/tonne premium for margin parity. But the long-term average is for only 30 per cent of milling wheat to make full specification. In that case, the premium would need to be more than £50/tonne to reach margin parity.”
He fears a diminishing area of milling wheat grown will lead to even less investment in new varieties and techniques, while the area could be even further hit by the severe problems caused by black-grass.
“The technical challenge of growing milling wheat is getting greater, which could affect the long-term supply of the crop. That would damage the entire milling industry.”
There can be a lot of friction in the milling wheat supply chain and this year’s poor weather appears to have exacerbated that.
But there is also a lot of agreement as to how the chain can be improved to ensure British growers continue to deliver the wheat needed by British consumers and that the country can grow.
All those interviewed for this article agree there needs to be more research into developing new varieties and techniques for growing and milling wheat.
There was also an acknowledgement more dedicated supply arrangements provide a way forward, allowing growers to commit to growing milling wheat and understand what is required of them.