Wheat ‘000/t
Barley ‘000/t
Export 2015/16 2014/15 Import 2015/16 2014/15
EU
Non EU
EU
Non EU
2,292 1,237
566 711
1,338
656 641
854 EU 157 135
EU
Non EU
Non EU
1,010 1,262
494 414
2 4
Net
EU
Non EU
EU
Non EU
2015/16 2014/15
1,282
72
1,181
654 637
- 25
297
719
Source: AHDB
Scrutton Bland have almost one hundred years’ experience in advising farmers, landowners, and those working in the rural industries in all areas of their business and personal financial affairs. For more information please contact Nick Banks on nick. banks@scruttonbland. co.uk or tel 01473 267073 .
The development of new markets outside the EU is another opportunity for UK agriculture; Algeria and Tunisia were the two countries that imported the most UK wheat in 2016. Our ability to grow crops of the right quality and specification may inhibit the extent to which new markets can be developed notwithstanding the strength of sterling. UK trade with certain non-EU countries is currently only possible through EU membership, so new relationships will need to be forged and it might be that it is price that enables us to compete against the negotiating strength and continuing trade agreements of the EU. To maximise the benefits of the UK market, farmers will need to continue to monitor their costs and maximise efficiency through precision farming. They will need to be seen to be the preferred producer to the UK supply chain – this might require better collaboration to engage with buyers and producers to provide assurance of quantity and quality of supply. Such collaboration will also stand producers in the best position to maximise any opportunity that the export market presents. Adding value and successfully growing premium crops will also maximise the opportunities to benefit from the UK market – 85% of the wheat used by UK flour millers is home-grown (source NABIM); subject to quality the shortfall is in the main imported from Germany and France. With a timetable which aims to complete negotiation of the UK exit from the EU by March 2019 it does mean that crops being planted now could well be sold in a post Brexit market. It is vital to evaluate how best your farming enterprise can benefit from the opportunities and take action now to mitigate the threats that new era will bring.
In 2016 the UK was a net exporter of £1.3m/t of wheat to the EU, although in 2015 the volume imported was only slightly in excess of that exported. The higher output of 2015 may have led to more commodity being available to export which would suggest, given the forecast 2017 harvest, much of what has been produced will be consumed within the UK market. In both years the UK exported a significantly greater amount of barley than that imported. In 2016 the volume of wheat exported represented 20% of the UK wheat harvest, and the volume of barley was 30%; but of the total tonnage exported, 80% of wheat and 67% of barley went to EU member states. The volume of trade with the EU is clearly a major factor influencing commodity prices in the UK, but what might a post Brexit marketplace look like in the event of a trade deal not being agreed? The overriding issue is supply and demand – will the UK output be sufficient for UK demand in which case will there be any surplus for the export market? There are a number of influences which may restrict supply: weather; the growing demand of the UK bioethanol sector; land coming out of production for development, and diversification to alternative crops and vines. The futures prices may support the view that the UK volume will remain tight and prices will reflect this. Long term concerns about limitation of supply could lead to genetic modification to enhance yield from a smaller cropping area.
A G R I C U L T U R E | S C R U T T O N B L A N D | 5
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