Market Report Forecasts Milk Production Growth

UK - Wheat and barley output has been revised downwards, while some growth is forecast for poultry meat and milk production, pork is flat, according to a new market report.

12 October 2011

3 minute read

Europe

A new Food and Beverage research report from Business Monitor International (BMI) is now available as the latest quarterly United Kingdom Food & Drink Report.

According to BMI, despite the Spring drought that looked likely to cause serious damage to the UK grains harvest this year, signs are that production has not suffered as badly as previously thought. Much of the wheat harvest is also of an excellent quality. With general supply problems resulting from poor harvests elsewhere in Western Europe and the US, UK farmers will be able to take advantage of high global prices on the export market. The environment for dairy farmers also seems to be improving, with prices continuing to rise and resulting in rising production this year.

Key forecasts

BMI has revised its wheat forecast for 2011/12 production and now expects the figure to come in at 14.0 million tonnes, down 6.0 per cent year-on-year. In 2011/12, barley acreage suffered again as farmers favoured wheat. Production in 2011/12 is forecast to fall to 4.84 million tonnes, down 7.8 per cent year-on-year.

Poultry production is predicted to rise 0.48 per cent to 1.58 million tonnes in 2011 as high feed prices slow growth.

It is forecast that pork production to stay level in 2011, coming in at 713,000 tonnes.

In the first half of 2011 (H111), the UK produced 6.97 million tonnes of milk, up 3.1 per cent on H110. BMI forecasts production in 2011 of 13.6 million tonnes, up 2.5 per cent year-on-year.

In 2011, the report expects to see growth in milk supply allow for some growth in consumption, which should rise 0.5 per cent year-on-year to reach 7.53 million tonnes.

Industry developments

The Vivergo Fuels bioethanol facility in Hull, whose investors are BP, Associated British Foods (ABF) and DuPont, is back on schedule. In March 2011, the plant ran into trouble when the owners terminated a contract with the engineering group constructing the facility, leading to the lay-off of 450 workers. The plant was forced to make a substantial pay-out to the workers affected. That dispute is now over, it seems. In August it was reported that 200 of the workers were rehired to finish the plant and that the plant was 'back on track' for an opening early in 2012.

The UK's Food Standards Agency has rejected EC proposals to relax a ban on feeding animals to animals. The FSA will recommend that the government vote against the plans in Brussels. The FSA was swayed by evidence from medical health experts, consumer groups, industry groups and companies such as poultry processor Bernard Matthews, who expressed reservations against lifting the ban. An EC vote on the proposal is expected by the end of the year.

The BMI report adds that UK Farm Minister, Jim Paice, has expressed scepticism that mandatory dairy contracts as proposed by the EU will do much to help the country's dairy producers. At the Dairy Event and Livestock Show in Birmingham in early September, Paice said some of the measures were helpful but much of the package was 'built on hope'.

He said that although contracts between producers and processors would become mandatory, there was no way to stipulate the contents of the contracts. The minister said that as a result he was trying to encourage the British dairy industry to come up with a voluntary code.