United Kingdom Agribusiness Industry Update Quarter 3 2012

  • June 2014
  • -
  • Business Monitor International
  • -
  • 135 pages

Includes 3 FREE quarterly updates

BMI View: Improving rainfalls in April helped grains yields to recover and we maintain our view for production to increase in 2012/13. This will help the country to increase its export capacity, especially as the Black Sea region is projection to have a slightly smaller output next season. We have slightly upgraded our outlook for the UK pork market as recent export deals with China could boost the market 's revenues and therefore encourage pork production in the medium term. The recent offer by Nordic industry player Arla Foods to buy the UK's fourth largest dairy, the cooperative Milk Link, should benefit the UK dairy segment, where farmers are experiencing tight margins and pressure from supermarkets to decrease prices.

Key Projections
- Wheat production growth to 2015/16: 12.6% to 17.1mn tonnes. This will be driven by increasing export demand, especially to step in for changes in output from the Black Sea region. Also, three new biofuel plants are set to be fully operational by 2014, which should encourage plantings in the medium term.
- Milk consumption growth to 2015/16: 4.4% to 7.8mn tonnes. Growth will be subdued because consumption per capita is already high, which means that further increases will come from population increases.
- Pork production growth to 2015/16: 1.3% to 768,900 tonnes. The recent supply agreement with China should boost production growth in the segment, as well as voluntary labelling agreements from the EU.
- Real Gross Domestic Product growth: 0.6% year-on-year (y-o-y) in 2012 (decreasing from 1.0% y-o-y in 2011). - Consumer inflation: 2.9% y-o-y in 2012 (down from 4.5% y-o-y in 2011). - BMI universe agribusiness industry value: 2.1% y-o-y decline to US Dollar 18.6bn in 2011/12, projection to grow on average 0.2% annually between 2010/11 and 2015/16.
Industry Outlook Lower output in the EU-27 will prevent a recovery in wheat exports from the union in 2012/13, leaving the union unable to step in again for the decrease in exports from the Black Sea region. This will come even though the EU-27 managed to replenish stocks on the back of a bumper crop and lower exports in 2011/12.The US Department of Agriculture (USDA) estimated 2011/12 ending stocks at 13.3mn tonnes, 13.6% higher than in 2010/11. As we projection the EU-27's production balance to fall from 9.6mn tonnes in 2011/12 to 3.7mn tonnes in 2012/13, most of the EU's export capacity will come from depleting stocks.
The US Dollar A projections the EU-27 to export 14.5mn tonnes in 2012/13, compared with 16.5mn tonnes in 2011/12.
We have revised our production projection for pork production in the UK in line with the British Pound 50mn trade deal, as we believe this will help boost output in the medium term. However, we stay cautious as British producers could face competition in accessing the industry, and we believe China aims to boost domestic production significantly in the coming years, in order to reduce import dependence. This could close opportunities to the UK pork segment in the longer term.
The inclusion of Milk Link into the Arla Foods group should be of particular benefit to the UK dairy segment, where farmers are experiencing tight margins. This is linked to price wars between the country's supermarkets which recently cut their milk prices by 2p/litre, while hard discounters cut them by 3p/litre.
This meant that with global prices already in a downtrend, prices in the UK industry are being squeezed further, discouraging production. In this context, Milk Link would benefit from its inclusion in Arla Foods as it would share the firm 's financial returns on an equal rank with other European cooperatives, strengthening margins and enabling better investment in capacity over the medium term.

Table Of Contents

Executive Summary ....... 5
Industry SWOT Analysis .... 7
United Kingdom Agriculture Swot ......... 7
United Kingdom Business Environment SWOT 9
Supply Demand Analysis ...... 10
United Kingdom Grains Outlook .... 10
Data : United Kingdom Wheat Production, Consumption and Trade ....... 10
Data : United Kingdom Corn Production, Consumption and Trade ......... 11
Data : United Kingdom Barley Production, Consumption and Trade ...... 11
UNITED KINGDOM Wheat Production, Consumption and Trade. 16
UNITED KINGDOM Corn Production, Consumption and Trade .. 16
UNITED KINGDOM Barley Production, Consumption and Trade 16
United Kingdom Livestock Outlook 17
Data : United Kingdom Poultry Production, Consumption and Trade ..... 18
Data : United Kingdom Pork Production, Consumption and Trade ......... 18
Data : United Kingdom Beef and Veal Production, Consumption and Trade ........ 18
Data : United Kingdom Poultry Production, Consumption and Trade ..... 20
Data : United Kingdom Pork Production, Consumption and Trade ......... 21
Data : United Kingdom Beef and Veal Production, Consumption and Trade ........ 21
United Kingdom Dairy Outlook ...... 22
Data : United Kingdom Milk Production, Consumption and Trade 22
Data : United Kingdom Butter Production, Consumption and Trade ....... 23
Data : United Kingdom Cheese Production, Consumption and Trade ..... 23
Data : United Kingdom Milk Production, Consumption and Trade 27
Data : United Kingdom Butter Production, Consumption and Trade ....... 27
Data : United Kingdom Cheese Production, Consumption and Trade ..... 28
United Kingdom Sugar Outlook ...... 28
Data : United Kingdom Sugar Production, Consumption and Trade ....... 29
Data : United Kingdom Sugar Production, Consumption and Trade ....... 30
United Kingdom Rice Outlook ........ 30
Data : United Kingdom Rice Production, Consumption and Trade 31
Data : United Kingdom Rice Production, Consumption and Trade 31
Commodity Price Analysis ... 33
Monthly Softs Update .. 33
Cocoa: Signs Of Life ........ 34
Coffee: Holding Key Support ..... 36
Palm Oil: Uptrend Intact . 38
Sugar: Watching Brazilian Yields ........ 39
Cotton: Downside Risks ... 41
Data : Select Commodities - Performance and BMI Projections ...... 42
Monthly Grains Update ........ 43
Wheat: Upside Risks Materialising ...... 44
Corn: Moderation In Place ........ 46
Soybean: Looking Weak ... 48
Rice: Temporary Strength 50
Data : Commodity Performance 50
Upstream Analysis ...... 51
GM and Europe: Growth In Plantings Restricted But Imports To Pick Up ... 51
EMEA Machinery: Emerging Europe Has Strong Potential ... 55
Country Snapshot: Romania Demographic Data ....... 58
Data : The United Kingdom's Population By Age Group, 1990-2020 ('000) ... 59
Data : The United Kingdom's Population By Age Group, 1990-2020 (% of total)..... 60
Data : The United Kingdom's Key Population Ratios, 1990-2020 ......... 61
Data : The United Kingdom's Rural And Urban Population, 1990-2020 ......... 61
BMI Projection Modelling ........ 62
How We Generate Our Market Projections ......... 62

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