Era of steady feed prices is over
UK - Higher cereal prices are putting much-needed cash into the pockets of arable farmers, but the downside is that livestock producers are facing the prospect of an unprecedented increase in feed costs.
20 February 2007
2 minute read
This situation will be exacerbated by the burgeoning demand for maize and other cereals for biofuel production in the US, according to Billy Davidson, managing director of Davidson's Animal Feeds, a Lanarkshire-based company that supplies more than 3,000 livestock farmers in Scotland and the north of England.
Davidson warns that farmers should steel themselves over the next six months for the most significant rises in the cost of feed for about 20 years.
He said: "Around 35 ethanol plants are planned or are under construction in the US.
"The price of Mexican tortillas has doubled in the past six months as a direct result of this type of development and the demand for maize. Supplies of wheat are tightening and palm, soya and rape oil prices are also rising by 30-50 per cent, due to biodiesel demand."
It seems probable that there will also be a dramatic reduction in the volume of US by-products that would normally be exported for feed.
Davidson pointed out that the increasing number of genetically modified varieties being grown in the US, none of which is approved for import into the EU, is adding to the pressure on feed prices.
However, Davidson reckons there is no need for panic and that the livestock sector should adopt a pragmatic approach. He said: "Farmers should be more discerning when buying feed, and rather than looking at costs per tonne, they must look at the best value, and maximise efficiency through technical progress.
"Key to that will be ensuring they have strong feed suppliers with access to reliable, global supplies to guarantee that they get the best value."
In general, the international markets in grains and other related commodities have been remarkably stable for the better part of two decades. This has actually seen a reduction in feed costs when inflation is factored into the equation, which has subsidised other cost increases in the typical livestock farming operation.
In the UK the trend for arable farmers to switch from growing wheat and barley to oilseed rape for the energy market will almost certainly put further upward pressure of grain values.
Source: The Scotsman
