Cargill opens large new wheat processing plant in Manchester

A new £75m wheat processing plant that will use 750,000t of UK-grown feed wheat has been officially opened by food processing giant Cargill in Trafford Park, Manchester.

The plant has previously used imported maize as its feedstock, but a decision was taken to convert the plant after a strategic review of Cargill’s European glucose and starch production, says the firm’s Frank van Lierde.

“It was a long term decision – you don’t spend £75m otherwise – based on a combination of cost, efficiency and our commitment to meeting the changing needs and demands of our customers.”

The plant will provide a valuable new outlet for wheat farmers in the UK, he suggests, and in the process reduce the UK’s wheat exportable surplus and reliance on export markets.

All the wheat will be sourced from UK growers through Frontier. Up to 200,000t will come from Frontier‘s Manchester Gold club members, says Jon Duffy, Frontier’s grain director. “The rest of the wheat will come from the open market.”

Preferential treatment

But the 1500 Manchester Gold club members can expect preferential treatment. “Growers signing up make no commitment, but we make certain commitments to them. For example, they will get preferential movement terms, load analysis within 24 hours and more regular market information.”

Contracts are available to supply the plant through the club, he says. “The biggest is the Gold standard. That’s a minimum-price contract where the farmer can benefit from any upward rise in the market place.”

It is an option-style contract, but the service fee is only 60-75% of a standard option charge, he says. Based on a £145/t wheat price for November 2008, growers signing up will lock themselves into a minimum price of £135/t after the £10/t service fee, he says. “If the price goes up to £200/t they will get the average price from the time they took out the contract and the close date.”

It will help protect growers from some of the market volatility, he suggests. “At the minute we don’t know where the market is going. If we have perfect weather and a big harvest the price will come down, but if there are weather problems somewhere it could be off to the races. People are nervous of change, but no one thinks the market is stable.”

The firm is also offering a flexi-contract, where farmers can opt for harvest movement, but price the wheat at a later date for a minimal storage fee. “It means he doesn’t have to pay any upfront storage prices.”

About 2000t of wheat is being delivered into the plant a day, Frontier’s Simon Christensen says. “The bulk of it is from Lincolnshire, Yorkshire and Staffordshire, although it has been from as far away as Northamptonshire.”

Frontier organises transportation of both wheat into the plant and the delivery of Trafford Gold – a moist feed aimed at dairy and beef cattle. About 40-50% of the lorries are filled up with Trafford Gold after tipping wheat loads.

At first sight that might appear to be a logistical nightmare, with wheat mostly coming from east of the Pennines and feed heading down into the south-west. But Mr Duffy says it will help takes cost out of the supply chain.

“By having this collaboration it cuts down massively on empty lorry miles. We estimate it has cut empty lorry time for wagons going through Manchester by 40%. It helps take unnecessary cost out of the supply chain, adding to efficiency.”

Wheat specification

The wheat being used by the plant is simply feed wheat with the usual specification – 15% moisture content, 72kg/hl specific weight, Mr Duffy confirms.

But as the plant gains more understanding of what it can do with specific varieties that might change, Mr Christensen notes. “Research is analysing starch levels from different varieties.”

Group 3 varieties, for example, may turn out to be favourable, he suggests. “They are favourable for distilling, so potentially might be good.”