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United Kingdom Agribusiness Report Q2 2009Published by: Business Monitor International Published: Apr. 24, 2009 - 54 Pages Table of Contents
AbstractThe UK boasts one of the most efficient agricultural industries in Europe, if not the world. Despitepossessing considerably less land than many of the top farming nations, it more than makes up for thisshortfall with its highly productive technological capacity and tightly integrated supply chain. However,the industry faces increasing challenges from a host of domestic and external factors; the CAP Healthcheck and the removal of producer support; the credit crunch and a weakening currency; competition foragricultural market share from newly galvanised - and high potential - developing nations. It is againstthis backdrop that BMI publishes the UK Agribusiness Report for Q209.In terms of poultry, wheat and barley, three of the biggest domestically farmed products, the UK ispositioned as the second, third and fourth largest producer in the EU respectively. Not only do these subsectorsperform well on a purely upstream basis, but factory-based value added processing is equallycompetitive, giving consumers the ability to choose from a variety of branded products at relativelyreasonable prices. Despite such well developed fundamentals, we forecast a turbulent road ahead forgrains producers throughout the course of the outlook with both barley and wheat volumes predicted todecline by 21.38% and 18.38% respectively. The effects of such factors as waning prices and reducedlevels of support via direct farm payments are expected to underpin our forecasts. Over the long term,falling production may lead to the UK revising its anti-genetically modified (GM) stance if it is to remaina major producer. As mentioned previously, poultry production is second only to France in the EU and, despite experiencinga slight downturn in the previous outlook period, as a consequence of highly documented bird fluoutbreaks, the outlook to 2013 is more positive in light of a growing popularity among health consciousconsumers. Furthermore, the versatility of poultry and its ability to be processed into a variety of readyto-eat snacks is destined to cement its position as the meat of choice for an increasingly time-constrainedpublic. We predict meat consumption across the board to expand to 2013, due in part to an increasing population;although by relatively small increments as a result of the maturity of the markets. Pork production is notexpected to record the steady growth attributed to the beef industry. In recent years pig herds havesuffered notable declines while foreign imports have gained in prevalence. One reason that could be given for this is the different methods of production in the UK compared to thecontinent. In countries like Germany and Holland, so called 'sow stalls' (small enclosures where sows areartificially inseminated, birthed and then impregnated again in a continuous cycle) enable pork to beproduced faster and in greater volumes than in the UK (due to an ethical backlash against the breedingmethods used in Europe, sow stalls are banned in the UK and pigs are predominantly outdoors reared). Despite British pork being touted as the best in Europe, producers cannot compete with the price of Dutchand German pork at a time when consumer belt tightening is leading many shoppers to temporarilysuspend their ethical stances. It therefore stands to reason that pork production is expected to decline by3.14% between 2009 and 2013, while the light at the end of the tunnel remains elusive. The UK comprises around 10% of total EU milk production and has high standards in processingjuxtaposed with good storage capacity. As one of Europe's elite producers, we feel that the phasing out ofdairy quotas as part of the CAP reforms will actually benefit the UK, as farmers should be able toadequately increase output to compensate for potential price reductions. As milk production increases by3.61%, cheese production will also expand, driven by consumer demand for protein enriched alternativesto meat and a source of dietary diversification. The issue of climate change and environmental sustainability is a theme which BMI believes will play anincreasingly important part in the choices of both producers and consumers, so biodiesel production andorganic sub-sectors are expected to grow as we progress through the outlook window. Similarly, ethicalissues are becoming entrenched in the public consciousness, which will benefit the fair trade movementand may result in British consumers doing more to support local producers and regionally sourced food. Get Full Details About This Report >> |
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