Soaring commodity prices set to hit winter feed bills

Winter feed bills are set to rise by £40/t this winter, according to Brian Mulholland, senior raw material buyer at feed compounder BOCM Pauls.

Talking to farmers at Ecclefechan, near Lockerbie, this week Mr Mulholland said all the rises were outside of the control of any feed compounder and even the UK as a whole.

For a 1m- litre dairy farm, using compound feed at the standard rate of 0.3kg/litre the extra bill will amount to 1.2p/litre, he said.

Poor harvests

Mr Mulholland said he had seen nothing like the current situation in 45 years of buying ingredients.

Soaring commodity prices, driven partly by poor harvests and increased world demand, and problems shipping imported products to the UK were to blame, he said.

“At the moment I cannot buy beans, corn gluten, corn distillers, sugar beet pulp, palm kernel expeller or sunflower meal.

Soaring shipping costs

“China has moved 500m people from farms to their cities, and they are importing their food instead.

“It has tied up the boats. At the moment there are 50 of the world’s biggest ships, with a combined capacity of 33m tonnes, in Australia loading coal and ores for China.

“The cost of shipping has soared by nearly seven fold in just over five years.”

Factors affecting feed prices:

  • The weather, and the prospects of poor harvests
  • Politics – the Ukraine has banned wheat exports and Argentina’s energy crisis means the Government forces businesses to stop work at 4.00pm, reducing crushing capacity
  • Bio-energy, and the drive to convert arable crops into ethanol for fuel
  • The lack of intervention stocks
  • Speculative investor trading on commodity futures markets
  • The growth of GM soya crop planting in the US, which won’t be approved for import into the EU

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