Putting Vivergo closure into perspective

Despite recent news that Vivergo is shutting down for the foreseeable future, AHDB market analysts say the impacts that will be felt, while important, might not be to the same extent as some might have initially assumed.

Zak Watling, AHDB Market Analyst, said: “The overall supply and demand situation doesn’t drastically change for the 2018/19 season, even though there will be a slight rebalancing of demand, when comparing historical usage with wheat production and consumption scenarios.”

Vivergo has a reported maximum consumption of 1.1 million tonnes of feed wheat per year.

“It would be unrealistic to expect demand for UK wheat to fall by the same amount. We have to remember that there are many factors affecting UK wheat consumption, not least livestock.”

AHDB analysts expect an increased demand for feed wheat, due to the dry summer and reduced availability of forage, as well as sustained demand from the poultry sector.

GB compound animal feed production, including integrated poultry units, in July was five per cent higher than the year earlier and the highest level for the month of July since records began in 1995/1996. What’s more, reduced production of DDGS from the bioethanol sector, while a small percentage of overall feed demand, will need to be compensated for.

The latest Defra and DAERA data, combined with the AHDB planting and variety survey results, suggest a total UK wheat area for 2018 of 1.8 million hectares. Together with an average national yield range of 7.7 to 8.0 tonnes a hectare, according to ADAS, this would suggest a theoretical wheat production figure of between 13.88 and14.42 million tonnes in 2018. However, this is only a scenario and the provisional Defra figure will need to be taken into account when available on 8 October.

Zak said: “Even with a five-year average consumption level, which sees a trade-off between reduced industrial sector wheat usage and increased livestock feed demand, we could still be seeing tightness within the UK wheat balance sheet.”

 

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About The Author

John Swire - Deputy editor of Agronomist and Arable Farmer as well as responsibility for the Agronomist and Arable Farmer and Farm Business websites. After 17 years milking cows on the family farm John started writing about agriculture in 1998 and has since written for a variety of publications and has developed a wide circle of contacts within the industry. When not working John is a season ticket holder at Stoke City and also of late has become a fitness freak, listing cycling, swimming and walking as his exercises of choice.