Rising wheat prices lead to industry fears on feed cost

Fears are growing over the rising costs of animal feed in the wake of spiralling wheat costs.

Meat bosses are even suggesting the UK government consider a similar action to Russia and ban UK wheat exports to counter the problem.

John Mercer, chief livestock advisor with the National Farmers’ Union, said: “We’re very concerned about the present situation and the outlook going forward. We need sustainable prices and need the market to take up some of the costs, especially on beef where prices are unsustainable. Farmers are struggling to produce with the higher costs and we need the market to recognise that pressure in the price.”

Peter Bradnock, chief executive of the British Poultry Council, said the poultry sector was not in a position to absorb the costs feed prices were starting to impose.

“The big hike in the cost of wheat, up 70% in just six weeks, will push production prices higher across poultry products as well as other foods,” he said.

“Wheat makes up around 50-60% of poultry feed and the higher-priced feed is already being fed on farm. This means higher production costs that have to be recovered from the market right now.”

As reported in MTJ (6 August), poor harvests and a shortage of silage, coupled with drought conditions, have pushed up the prices of wheat.

Concern is also rising among the pig sector, with farmers calling for the increased costs of production to be recognised by the DAPP — otherwise producers risked moving back into the red after only a short period of profitability. According to Bpex, based on current and forecast prices for wheat, barley and soya, the cost of English pig production is predicted to rise from 137.2p/kg in June 2010 to 152p/kg in August 2010, where it is forecast to remain.

It said the impact of production cost increases was that English pig producers would move into negative returns for every pig slaughtered, subject to future movements in the DAPP.

Head of communications and supply chain development for Bpex Andrew Knowles said: “Maintaining the DAPP at current levels is essential to avoid the crisis witnessed in the pig industry in 2007/08. Retailers and the supply chain need to act now to secure supply, rather than having to over-react later.”

Bradnock added that Russia’s example might provide a solution: “If this situation worsens, the UK Government will need to consider taking the same action in respect to British wheat exports.”

However, high street sausage roll and sandwich retailer Greggs played down concerns. Chief executive Ken McMeikan said the prices were overheated and he expected them to come down.

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