Failure to switch from out-and-out feed varieties to new, high yielding wheats with better quality and wider market appeal could see UK growers and grain merchants in a price race to the bottom, with the UK losing out to more efficient alternatives, such as maize.

Speaking at the launch of two new quality winter wheat varieties from KWS UK, HGCA lead analyst Jack Watts said that increasing world production of maize is making life as a commodity feed wheat producer more challenging.

“Maize and wheat production is forecast to increase over the next decade, but from near parity in 2000, maize has emerged as the dominant coarse grain due to increased area and yield gains far in excess of that being achieved in wheat. The consequence of this is that feed wheat will face increased competition from what is a more efficient feed grain source,” he said.

He is not advocating a wholesale swing to closely defined nabim Group 1 or 2 quality types, but instead that there is a need for greater balance between those considered milling wheat and those defined as feed varieties.

“Growers need to keep their options open, if only because of the climate pressures of growing wheat in this country. It is possible to grow quality wheats for feed markets, but not feed wheats for milling or biscuit markets,” he added.

FEED GRAIN COMPLEX The price relationship between feed wheat, feed barley and maize also warrants consideration, suggested Mr Watts. In recent months the price of maize has set the base price in the market, but by virtue of its abundance it has made exporting feed grain more challenging while simultaneously dragging down the price in order to make it compete.

“Feed wheat is in a brutal fight with maize and feed barley simply to maintain market share; it’s a perilous position to be in,” he said.

Grower preferences for feed wheat – Group 4 varieties accounted for about 60 per cent of the UK wheat area in 2014 – have largely been driven by the yield advantage these types offered over milling varieties, but with that gap now far smaller or even non-existent in some instances, Mr Watts suggested it was time for growers to review their cropping policies.

“We tend to talk about milling wheat as trading at a premium to feed, but if we turned it round to think of feed wheat trading at a discount to milling, which this season is about £40/t for full milling specification down to £7/t for low protein export markets, then perhaps more would come to recognise the income they are foregoing by the wholesale planting of feed wheat,” he said.

His views were supported by Heygates director George Mason who said that “the UK has earned the unfortunate reputation as the feed wheat exporter of Europe”.

“There is false belief that milling wheats are hard to grow or that unless you hit the 13 per cent protein target you won’t receive a premium. It’s not true; most end-users recognise how the weather can influence yield and quality and so have fall-back positions to 12 per cent. This greatly eases the pressure on growers,” he said.

Market volatility since the economic crisis of 2007 has also clouded farmers thinking about market economics, he believes. “Increasing prices have supported this blinkered vision that tonnes equal profit. The reality is that market will always reward quality.”

Introducing the new KWS varieties commercial director Andrew Newby explained that they were the first from the plant breeder’s ‘Dynamic Wheat’ pipeline to satisfy the market needs of the next decade.

“After two successive record harvests the world is awash with coarse grains. As a result, the times when all growers needed to do was produce a big heap and the market would pay them £200/tonne are long gone.

“If we are to compete in domestic and international markets we need versatile varieties that fulfil export specifications and can attract a premium yet are yield competitive with Group 4 feed wheats.”

New Varieties For autumn 2015, KWS has seen KWS Trinity recommended as a nabim Group 1 and KWS Lili as a nabim Group 2. Both offer excellent yield combined with all-round impressive disease scores, says KWS.

“Although a Group 2 we expect KWS Lili to find a place on every farm. We are already seeing strong demand from the south west where it has attracted interest due of its strong disease resistance which has impressed in trials.

“With a yield of 105 per cent of controls it is ahead of Group 4 favourite JB Diego and only 2 per cent behind the top yielding variety on the 2015 HGCA Recommended List, but with the quality to suit low premium export markets there is every chance it will attract a premium.

“ukp quality wheat for export, for which KWS Lili is ideally suited, has routinely secured a premium of £5-7/tonne this season which would make it the highest gross margin wheat outside the Group 1 sector,” said Andrew Newby. A basic gross margin analysis of KWS Lili in comparison with an average of the highest yielding Group 4 feed wheats (Reflection, Evolution and KWS Santiago) and the UK’s most widely sown variety, JB Diego, suggest that it is highly competitive, even without a price premium.

“KWS Lili’s yield is outstanding. Even if grown for feed its yield performance puts it ahead of JB Diego and almost on a par with the top three highest yielders. Add in a premium, even of just a few pounds per tonne, and it’s the clear winner,” said Mr Newby.