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United Kingdom agribusiness report

Recent years have brought tough times for many British farmers. The dairy industry, in particular, is in poor health with as many as 500 farmers leaving the business every year. Poultry production is stagnating and pork production is projected to decline over the coming five years. But new initiatives to defend British produce, including a supermarket agreement to label British-sourced meat and dairy, and EU proposals to shore up the dairy industry should lessen the pain over the coming years.

- Milk production to decline 2.0% year-on-year (y-o-y) in 2011 to 12.94mn tonnes as dairy farmers continue to leave the industry in the face of unprofitable farmgate prices. Cheese production to rise 2.0% y-o-y to 378,000 tonnes.
- Poultry production to rise by a sluggish 0.36% in 2011 as high feed prices put a stopper on expansion. Pork production to drop 0.95% to 665,000 tonnes.
- In 2010/11 we expect wheat production to come in at 16.0mn tonnes. New biofuel plants to encourage higher wheat plantings over the forecast period, with production expected to reach 16.6mn tonnes in 2014/15, given average growing conditions.
- Over the forecast period to 2014/15, sugar production to decline by 20.1%, resulting from domestic and international factors.

Industry developments

Nocton Dairies has scaled back its plans for what will become the UK's largest dairy farm. A herd of 8,000 head has been reduced to 3,700. The cows will have access to outdoor paddocks during the summer. Nevertheless, if the venture proves a success Nocton is expected to increase the herd to 8,000 as originally planned. Meanwhile, several major supermarket chains have announced they have no plans to buy milk from Nocton.

On December 9, the European Commission (EC) released proposals for dairy industry reform. The measures would allow for written contracts between milk producers and processors. This would give farmers a better idea of the price their product would fetch in advance of delivery. The EC also proposed to allow producers to negotiate collectively with dairies, in effect forming a cartel. The measure should to some degree tilt the balance of power between producers and processors more in farmers' favour. In early December 2010, EU health ministers voted in favour of extending compulsory labelling of agricultural produce to cover lamb, pork and poultry. Mandatory labelling already applies to beef, as well as fruit and vegetables.

Nevertheless, in November the UK's major supermarkets entered into a voluntary agreement to label the origin of all meats and dairy products. Although critics claim the agreement is an effort to forestall stricter legislation, BMI believes the deal can only benefit British meat and dairy producers.

In November 2010, the Co-operative joined Hovis in announcing that it too would use 100% British wheat in all its own-brand sliced bread, amounting to 7.9mn loaves per year. The move means the firm will source around 14,000 tonnes of flour from 4,000 British farmers every year.

by S. C.
30 january 2011, World News > Europe

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