The results for the July cut represent the first 20 to 25 per cent ofthis year's wheat harvest, which was gathered before the main spate of bad weather in August, according to the Provisional Cereal QualityReport by the Home Grown Cereals Authority (HGCA).Currently, the UK uses around two-and-a-half million tons of home-grown wheat for bread-making and about another million tons for other bakery products such as biscuits and cakes, which means any price increase as a result of a poor harvest has a direct and significant impact on the bakery industry.
According to HGCA economist Julian Bell, the prices have already risen sharply. Bread wheat was priced at around £86 (€126) per ton in July this year but has now risen to £98. Meanwhile, the price of wheat for animal feed has dropped £4 per ton because of increased availability caused by down-grading due to poor quality.
Compounding the problem, Bell also believes that the wheat cut in August might not be much higher in quality due to the worsening weather. And a September economic review by the National Association of British and Irish Millers (NABIM) says the bad weather has caused significant damage to the wheat crop, especially in the midlands and north.
Consequently "wheat has been more susceptible to sprouting, lodging and disease, threatening its bread-making properties," says the NABIM review.
The wettest August on record has also meant that only around 60 per cent of the UK's wheat crop has so far been harvested, while the last of the 2003 harvest has now been used up, leaving a short-term gap in supply.
HGCA analyst Bell said: "The UK will be importing more wheat this year and that will be more expensive. At the moment millers cannot source enough domestic wheat and premiums for good quality wheat have shot up."
NABIM says in its review that the UK's poor weather is also likely to offset any price decreases in UK wheat as a result of what is expected to be a record world grain harvest.
In order for wheat to retain its bread-making quality, it must beproperly dried before going into storage, something the HGCA has been actively advising its members on, according to its assistant director of research and development, Dr. Roger Williams.
Williams was optimistic that although UK wheat quality may dip below the three year average, growers knew what they had to do and that there should not be a huge problem long-term. He said the north of England and Scotland were used to wet weather and had good infrastructure in place.
Bell said that a fuller assessment of the situation would be available once the full harvest had been assessed. "There may beenough bread wheat around but we are just not sure yet," he said,adding that the wheat would take time to dry and some growers may be holding on to their stocks to try and get a better price.
He was also confident that around 80 to 85 per cent of UK bread wheat would continue to be bought by UK millers as that was the cheapest option. "There aren't many suppliers in the UK who want to see imports coming in."