Agflation in the global market place

NFU president Peter Kendall and HSBC’s Martin Coward will launch the forums with a detailed look at agricultural inflation in the highly volatile global markets and give a prognosis for the coming seasons.

The debate will identify the underlying drivers of the rapid inflation seen in food prices and the resulting impact on market stability. The speakers will also examine the unpredictability of agricultural commodity prices and the impact of the economic situation in the USA, EU and the UK on currency, inflation and interest rates.

“It is worth remembering that LIFFE wheat futures only broke through the £100/t level in April last year,” says Mr Coward.

“With global wheat stocks at a historically low level, markets are likely to remain nervous and volatile in the months ahead. The market is extremely vulnerable to another poor harvest, so news tending towards that outcome could send prices surging still higher.

“But at a more fundamental level, it is argued that the supply position is likely to remain tight into the medium/long term because of the rising demand for foodstuffs and animal feeds in fast-growing emerging economies, and by the rapid growth in the use of biofuels.”

Collaboration brings lucrative wheat deal

This forum examines a joint vertical grain-chain venture which has secured a two-year deal to supply Sainsbury’s in-store bakeries with wheat – the first deal of its kind in the arable supply chain.

The initiative was made possible on the back of a two-year programme implemented by English Farming and Food Partnerships which focused on developing the business strategies of Camgrain and Grainfarmers.

“For the first time, British arable farmers have a direct relationship with a specific retailer for in-store bakery bread, and Sainsbury’s customers know the provenance of their loaves,” explains Siôn Roberts, EFFP chief executive.

“This long-standing commitment by Sainsbury’s is a great example of how farmer-controlled businesses can add value to their members and British farmers. Sceptics have long suggested that arable farmers are too far removed from the market to be able to add value and develop relationships with customers like Sainsbury’s, but this initiative has proved detractors wrong.”

Mr Roberts will also explain to forum-goers how EFFP has helped to establish a similar whole-chain venture, a link between Grainfarmers, Centaur Grain and logistics giant DHL to improve the supply of bulk grain supplies to Rank Hovis.

“Both of these projects demonstrate the significant benefits that collaboration between farmers and the food chain can bring.”

Carbon, climate change and water debate hits Cereals

Farmer and Farmers Weekly columnist Hugh Broom and a climate change expert will debate the big issues facing the UK arable sector. All event visitors will be encouraged to hear what science, economics and practicalities the speakers consider the UK arable sector needs to adopt to develop a “lower footprint” future.

“There’s no doubt that there are massive environmental and resource issues for agricultural producers and the key ones are water, energy and nitrogen,” says Mr Broom.

“The grain market could almost be considered a pseudo-trade for water availability, given that it takes 1000 litres of water to produce one tonne of grain. We complain in this country about reduced rainfall in regions like East Anglia, but our position bears no comparison with other regions of the world.

“Egypt is a very good example of how a lack of water can radically change a country from a net exporter of grain to one reliant on the import of significant tonnages to meet their domestic needs. The reason is the Nile is drying up because of all the damming and water abstraction along the river’s length.”

Alongside the concerns for the long-term future of oil, Mr Broom also makes the point that nitrogen availability is a concern. “Ammonium nitrate’s future creates a dilemma given the huge amount of energy in the form of natural gas required to produce it. Nitrogen costs have trebled over the past three years, but without it we are stuffed in this country.

“I’m not saying that we all need to move to extensive organic systems, but we do need to be open-minded to other management approaches for both environmental and resource availability reasons.”

On the issue of farming’s carbon footprint, Mr Broom makes a provocative point about where the focus should be: “The energy requirements for front-end production of food are very small in comparison with the energy required to process, transport and refrigerate food further along the chain. At the moment sourcing local from places like Borough Market is trendy in the future it’s likely to be essential.”