Cargill has officially opened its new wheat processing plant in Manchester. Mike Abram reports

A 750,000t market for home-produced feed wheat is finally up and running, with the official opening of Cargill‘s £75m wheat processing plant in Trafford Park, Manchester.

The plant, which used to process imported maize, would provide a valuable new outlet for wheat farmers in the UK, Frank van Lierde, head of Cargill’s European sweeteners business, said at the opening. “Our aim is to source 100% of the wheat from the UK.”

He expected wheat to be the best starch feedstock in the long term in the new environment created by abolition of price support with the CAP.

But he recognised the price of commodities, including wheat, had risen significantly in the past year, not least because the CAP reforms had brought EU grain prices close to world levels, meaning that a wider range of factors from outside the EU affected grain prices in the UK. Global weather trends affecting yields and the demands to feed a growing global population were two such factors, he said.

It meant the traditional relationship between maize and wheat, where maize was 20% more expensive than wheat, and hence made starch manufacture from the commodity also more expensive, had not held true this year.

But Cargill was well positioned to take a long-term view on markets and ride out short-term or cyclical trends, he said. “Wheat remains the most widely grown cereal crop in the UK, and our ability to source this locally as opposed to importing maize from the Continent provides us with significant benefits in the longer term.

“These benefits range from cost to logistical efficiencies to better traceability and, therefore, more efficient quality control. Our system in Manchester will allow us to trace each 30t load of wheat back to the farm of origin. This in turn means farmers can now receive feedback on the quality of wheat they are producing.”

The market was responding to the high wheat prices, Martin Douglas, Cargill’s general manager of starch and sweeteners in UK and Ireland, said. “This year has been exceptional, but already we see the market responding. Wheat plantings are 10.4% higher in the UK and similar is happening elsewhere, so if the weather is favourable I would expect to see a return to price normality.”

It had put some pressure on the markets where glucose – one of the end products from the processing (see panel) – competed with sugar, he admitted. “Sugar is becoming relatively cheaper because of the changes in the EU sugar regime, so in some markets where sugar is an alternative because of the high prices of cereals glucose is less attractive.

“In other markets where functionality is more important, the rise in cereal prices is less important.”

Ultimately, he saw those problems being very short term. “I expect as trade has now been liberalised, the market for energy crops including sugar, wheat and corn to reach a balance, and over time it will mean glucose produced from wheat will be a competitive sweetener source for the UK.”

Contracts

• Grain to be supplied through Frontier
• Option to join free Manchester Gold club
• Members receive preferential terms
• Contracts include option-style Gold offer – minimum price + benefit from upward movement

For more information on contracts to supply the Manchester plant see this story.