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Digital Re-print - July | August 2012 A fresh perspective on UK milling wheat

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Escalating production costs and risks, uncertain premiums, growing workload pressures and attractive

feed prices are all serving to undermine the confidence of even the most histori-cally committed of UK milling wheat growers. To such an extent that a fresh industry-wide approach to quality wheat will be essential if sufficient domestic production is to be maintained.

Annual HGCA surveying shows a reduc-tion of just under 20 percent in the area of Group 1 & 2 wheats grown in the UK over the past four years – from 650,000 ha in 2009/10 to less than 530, 000 ha in the most recent season (Figure 1).

HGCA quality records further show 2011 was the best year for wheat quality since 2006 with 40 percent of Group 1 samples making the full 13 percent pro-tein, 250 Hagberg, 76 kg/hl spe-cific weight milling specification. This meant quality wheats were in reasonable supply despite the substantial shift away from milling wheat growing.

2012 outlookThis year, however, things look

set to be very different. Protein lev-els and specific weights, in particular, are widely expected to be disap-pointing. Fusarium infections have heightened mycotoxin concerns. And the atrociously wet summer meant a challenging, delayed harvest.

Overall, quality is likely to be far closer to the 10-year average than last year. And it might even be nearer to 2007 and 2008, when just 11 percent and six percent respec-tively of Group 1 wheat samples made the full specification (Figure 2). So domestic sup-plies are set to be tight.

The current season’s difficulties and con-cerns are also making farmers less inclined to grow milling wheat; especially so in the face of increasingly attractive world feed wheat prices and expanding domestic feed grain markets for bioethanol.

The indicative margins our farm manage-ment specialists calculate on a regular basis for our agronomists to work with their grow-ers, indeed, show milling wheat stacking-up relatively poorly against feed wheat produc-tion – even before the latest steep rises in world markets.

At a very modest £155/tonne, for instance, a 10t/ha 2011/12 Group 4 wheat is set to deliver a gross margin of £894/ha. This compares with £723/ha for a 9t/ha Group 1 at the same price. Assuming it is paid on the entire tonnage, this means a premium of £20/t is required for margin parity.

However, if only 30 percent of samples make the full specification – in line with the 10-year average – our calculations suggest this premium will compensate for less than half the feed wheat yield difference at the base price of £155/tonne, making milling wheat a seriously unattractive proposition.

Under these circumstances and with such pressures on margins and workloads, it is hardly surprising so many growers are losing confidence in milling wheat. All the more so with the premium variations and intake deductions they encounter, not to mention

increasing economic and environ-mental pressures on nitrogen and other essential input use.

Meeting milling specifications

In addition, of course, there is an urgent need to respond to the serious black-grass challenge facing up to 20 percent of the present wheat area and the legacy of the most substantial take-all and foliar disease season in recent memory; challenges which may well necessitate alternative crop-ping strategies in some cases, with particular consequences for the

A fresh perspective on UK milling wheat

by David Neale, Business Development Manager, Agrii, United Kingdom

Figure 1: Group 1 & 2 Wheat Area Source: AHDB HGCA Variety Survey Results

Grain&feed millinG technoloGy24 | July - august 2012

FEATURE

Escalating production costs and risks, uncertain premiums, growing workload pressures and attractive

feed prices are all serving to undermine the confidence of even the most histori-cally committed of UK milling wheat growers. To such an extent that a fresh industry-wide approach to quality wheat will be essential if sufficient domestic production is to be maintained.

Annual HGCA surveying shows a reduc-tion of just under 20 percent in the area of Group 1 & 2 wheats grown in the UK over the past four years – from 650,000 ha in 2009/10 to less than 530, 000 ha in the most recent season (Figure 1).

HGCA quality records further show 2011 was the best year for wheat quality since 2006 with 40 percent of Group 1 samples making the full 13 percent pro-tein, 250 Hagberg, 76 kg/hl spe-cific weight milling specification. This meant quality wheats were in reasonable supply despite the substantial shift away from milling wheat growing.

2012 outlookThis year, however, things look

set to be very different. Protein lev-els and specific weights, in particular, are widely expected to be disap-pointing. Fusarium infections have heightened mycotoxin concerns. And the atrociously wet summer meant a challenging, delayed harvest.

Overall, quality is likely to be far closer to the 10-year average than last year. And it might even be nearer to 2007 and 2008, when just 11 percent and six percent respec-tively of Group 1 wheat samples made the full specification (Figure 2). So domestic sup-plies are set to be tight.

The current season’s difficulties and con-cerns are also making farmers less inclined to grow milling wheat; especially so in the face of increasingly attractive world feed wheat prices and expanding domestic feed grain markets for bioethanol.

The indicative margins our farm manage-ment specialists calculate on a regular basis for our agronomists to work with their grow-ers, indeed, show milling wheat stacking-up relatively poorly against feed wheat produc-tion – even before the latest steep rises in world markets.

At a very modest £155/tonne, for instance, a 10t/ha 2011/12 Group 4 wheat is set to deliver a gross margin of £894/ha. This compares with £723/ha for a 9t/ha Group 1 at the same price. Assuming it is paid on the entire tonnage, this means a premium of £20/t is required for margin parity.

However, if only 30 percent of samples make the full specification – in line with the 10-year average – our calculations suggest this premium will compensate for less than half the feed wheat yield difference at the base price of £155/tonne, making milling wheat a seriously unattractive proposition.

Under these circumstances and with such pressures on margins and workloads, it is hardly surprising so many growers are losing confidence in milling wheat. All the more so with the premium variations and intake deductions they encounter, not to mention

increasing economic and environ-mental pressures on nitrogen and other essential input use.

Meeting milling specifications

In addition, of course, there is an urgent need to respond to the serious black-grass challenge facing up to 20 percent of the present wheat area and the legacy of the most substantial take-all and foliar disease season in recent memory; challenges which may well necessitate alternative crop-ping strategies in some cases, with particular consequences for the

A fresh perspective on UK milling wheat

by David Neale, Business Development Manager, Agrii, United Kingdom

Figure 1: Group 1 & 2 Wheat Area Source: AHDB HGCA Variety Survey Results

Grain&feed millinG technoloGy24 | July - august 2012

FEATURE

Experience, after all, teaches growers that however attractive premiums may appear for the immediate season, they cannot be relied upon for the period over which they are having to budget (2013/14 sales for crops planted this autumn).

In recent years we have been involved in the development of a number of dynamic market-led examples for encouraging suf-ficient supplies of crops for value-added markets that could provide a model for the new, more productive industry relationship we believe is vital for the health of UK milling wheat production.

Particularly attractive in this context are the arrangements that have been developed to encourage the reliable supply of specialist rapeseed and oats.

Closed-loop contracts have been devel-oped between growers and OSR crushers for High Oleic, Low Linolenic (HOLL) rape to serve the healthy cooking oil market, and between growers and millers for naked oats for human food and high value animal feeds.

These offer fixed premia over standard rapeseed and feed wheat respectively for supplies meeting agreed specifications grown on specific contract; arrangements which provide growers with the assurance they will receive a set premium for a specific crop if it makes the required specification before they commit to growing it. And equally, from the processors’ stand-point that they can secure the supplies they need to serve their custom-ers at a fixed premium over the commodity market.

In the face of the serious production, market and environmental pressures fac-ing milling wheat producers, we no doubt that such a thoroughly joined-up industry approach to marketing as well agronomy will be essential to the very future of UK milling wheat production.

Added to data from breeders and official testing, this allows us to pick varieties that will best meet our customers’ require-ments and provide the best possible advice on their suitability for different rotational slots and conditions. It also means we can offer the most timely agronomic support to help improve produc-tion efficiency and reli-ability in the face of the increasing seasonal

variability associated with climate change.This detailed variety understanding fur-

ther means we can plan seed production, and work with buyers through our partners, Glencore and Scotgrain to secure ready markets ahead of a variety’s commercial availability. That way we’re able to ensure both sufficient seed supply and sufficient end-market demand.

In parallel, close working with wheat breeders through leading UK authority, Bill Angus is giving us a valuable edge in making the most of the much more rapid vari-ety progress possible through exciting new genetic technologies like genome mapping, marker-assisted selection, double haploidy and single seed descent.

Encouraging sustainable crop valuation

Even so, all this work alone won’t be suf-ficient to prevent the decline in milling wheat growing reaching a level at which it causes serious future supply shortages. It needs to be accompanied by an altogether more sustainable and predictable approach to crop valuation and premium-setting.

second wheat slot in which so many milling wheats are currently grown.

Our industry-leading Co-ordinated Growing Systems (COGS) research into varietal capabilities and agronomy across different soil types is enabling us to develop very much more reliable recipes for milling wheat production for growers across the country; particularly so as far as meeting the protein specification – by far the most com-mon reason for Group 1 sample failures – is concerned.

We have, for instance, established indi-vidual response curves for grain protein accumulation from applied nitrogen for key varieties on heavy and light soils over a number of seasons as the basis for far more precise agronomy.

Equally, extensive long-term black-grass and second wheat management studies are allowing us to support producers with the best possible guidance on maintaining winter wheat viability in face of the most important agronomic challenges.

Through our work we’re able to estab-lish early in an emerging variety’s life how good it really is and where it best fits.

Figure 2: Proportion of Group 1 Wheat Samples Achieving Full Milling Specification Source: AHDB

HGCA Quality Survey Results

Grain&feed millinG technoloGy July - august 2012 | 25

FEATURE

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In this issue:

• Generating added value by extrusion

• Health & safety in the working environment

• Powder Containment

July - August 2012

• Nutritional impact of pellet binders

• Technological expertise

Understandenzymerecoveryinpelletedfeed

• A fresh perspective on UK milling wheat

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