Harvest predictions vary - but could there be a record yield?
© ARCHANT NORFOLK 2015
Farming forecasts might disagree on whether this year's harvest could bring the highest wheat yield on record - but either way, the bulging surplus won't help the depressed prices paid for grain.
Supply and demand can be a double-edged sword in the arable world.
So while some are predicting that this year’s wheat yield could potentially be the largest on record, the optimism is tempered with warnings that those bulging stores will only add to continued pressure on the grain market.
The National Farmers’ Union’s (NFU’s) harvest survey results suggests a 6pc rise in wheat yield since last year from 8.6 to a record 9.1 tonnes per hectare (t/ha).
Allied to a reported decrease in planted area, that would equate to an estimated UK total wheat production of 16.68m tonnes which, if accurate, would beat last year’s figure of 16.61m tonnes – a quarter of which was grown in the Eastern region.
However, there’s a slight difference of opinion on the overall wheat production. Defra’s provisional 2015 wheat harvest, announced yesterday, is 16.1m tonnes, a decrease of 3pc.
The government’s complete analysis and yield data is expected next week, but regardless of whether it’s slightly up or down, there can be no argument that it has been another huge harvest.
And after such a successful farming year, there will be a few furrowed brows among marketers and traders, trying to find the best price in a market flooded with grain.
Tom Dye is the managing director of Albanwise Farming, overseeing 20,000 acres of arable land at four sites in Norfolk and Yorkshire. At the company’s Norfolk farms in Barton Bendish near Swaffham, and Saxlingham near Holt, the company has grown 3,700 acres of wheat this year.
Mr Dye, who is also one of the East Anglian representatives on the NFU Combinable Crops Board, said: “We are 25-30pc up on our budget yields across the board.
“The unusual thing is that this is across all crops. Usually barley might be down while wheat is up, but this year has been different.
“So the farmers are pretty happy, but we have now got the marketing headache. We came into this harvest reasonably well sold so we are in a better position than other growers with a high proportion left to sell.”
Mr Dye said farmers with access to storage, who could wait for better prices before being forced to sell, would be in a better position to take advantage of the glut of grain.
“The volumes mean there is still an opportunity to make some money as a long-term holder of grain, but it is a challenge.
“We tend to put everything into store. We are not harvest-selling anything, and we are fortunate enough to have enough storage to open up the right window. We forward-sold 60pc of our wheat crop which gave us some flexibility.
“I think maybe it would be better all round if we all had a bad harvest to bring the prices up. But I think generally farmers would rather have full barns and low prices.”
Mr Dye said the farm specialises in feed wheats, but it did grow some Skyfall, a premium variety for bread-making, which yielded an “amazing” 11.2t/ha – although only 40pc of it, harvested before August’s rains, met the high standard to gain the premium price for milling wheat.
Tim Isaac, east regional manager for AHDB (Agriculture and Horticulture Development Board) Cereals and Oilseeds, said: “A lot of these results have genuinely surprised people, both at a farm level, and at a wider level.
“Practically speaking, it was a very difficult and frustrating harvest because of the weather, so it affected people’s view on how it was going, but it would appear that yields were pretty good.”
The provisional results of the AHDB’s cereal quality survey shows that the average Hagberg Falling Number for GB wheat is still above the benchmark level, although slightly lower than the initial provisional results. The Hagberg is the standard method for determining sprout damage in cereals.
Above average rainfall from mid-August had led to concerns that the Hagberg may fall considerably. However, the latest results have shown that the decline has been no greater than usual – although the average Hagberg is now below the previous three-year average.
Mr Isaac added: “I think generally speaking this year’s quality will still be good. Some crops will have been affected by the weather in different ways in different areas but when we get all the results across the board, I think the quality will generally be good, as well as the yields.
“But it is important to say that neither the yield or the quality will help the prices. There are some new markets on the horizon, but with the export market it depends on the relative quality, compared to their own. There are some export options but that picture is still unfolding.”
The NFU said 222 respondents across England, Wales and Scotland provided information for the harvest survey. Respondents were asked to provide two years of data to allow for greater accuracy in the forecasting.
Although the NFU’s projected yield per hectare would be a record-breaker, the total wheat production estimates are below the record level in 2008 when 17.23 million tonnes of wheat was produced.
Mike Hambly, the NFU’s combinable crops board chairman, said although it was “great news” to see another successful national harvest, it needed to be analysed in a global pricing context.
“Cereal prices are global and like most commodities are currently low,” he said. “For example, we’ve already seen prices taking a 30pc tumble over the past two years, similar to our friends in the dairy sector, and costs of production staying put. Many growers are facing the prospect that grain prices will fail to cover the cost of production. For some this will be the second year they have endured such a situation and with forward prices for next harvest also below cost of production some could see no profit from those crops for three consecutive seasons.
“There are a number of real opportunities where we believe government should act to help improve the competitive position for our industry. It is vital for departments across government to take a closer look at how regulation impacts arable farmers.
“This includes the Department for Transport on their UK cap on crops used for biofuels to bring them back into line with EU targets, and the Financial Conduct Authority on essential access to the futures markets for coping with volatile prices.
“We are also encouraging Defra to support our calls for access to the plant protection products that safeguard our yields from loss to disease, weed and pest competition; and for a review of EU fertiliser tariffs that we believe are driving production costs up.
“The value of the cereals sector has more than doubled in the past five years to nearly £3.5bn. The importance of our part in producing food for the nation, contributing to the economy and creating jobs cannot be underrated.”