Farmers in central and southeastern Scotland have an additional concern this harvest as East Lothian-based grain merchant Alexander Inglis and Son collapsed last month.
The company, which supplies cereals and grains for the whisky and distilling sector, is being wound down after last year’s poor harvest and COVID-19 cut cereal demand.
The company, which was led by the former Scotland Rugby captain Jim Aitkin, is currently being wound up.
Who owns the grain in the sheds may take time for administrators to conclude, all the while new crop is only weeks from harvest
The company’s grain stores are up for sale but it is not clear if any new buyer will use the sheds for the purpose for which they were built. Further, the sheds will need to be cleared of stocks of last season’s grain if any new buyer is to honour Alexander Inglis’s contracts.
Who owns the grain in the sheds may take time for administrators to conclude, all the while new crop is only weeks from harvest.
Anecdotally, it is suggested the company has contracted up to 150,000t of grain this harvest with Scottish farmers.
If a solution is not found, then around 60,000 acres of cereals will be looking for a new home. This is causing fear among farmers as there is no capacity to handle this volume of grain in Scotland.
This oversupply means that many distillers may not be needing the cereals which they have contracted with Inglis and Son
Ultimately, the key decision on how these contracts will be handled lies with the distillers who are to be supplied the grain. Currently there is a carryover of grain due to subdued demand for cereals thanks to the impact of COVID-19 closing pubs and clubs across the globe.
This oversupply means that many distillers may not be needing the cereals which they have contracted with Inglis and Son. It is understood that Diagio has some of the largest contracts with the collapsed company and how they want to proceed will be critical to the future of farmers sitting with contracts to supply.
Scottish cereal crop update
“The spring barley has been stressed a bit this last few weeks but they are looking better than 2020. There is nothing to say it will be a bumper crop or a failure so we will have to wait and see. But at the moment the plants are getting through the growth stages and catching up after a cold May.
“The winter crops are looking well too after a difficult time until spring. The first spray for disease on the winter wheat was perhaps a bit later due to the weather but the crops have cleaned up now and are looking healthy. Winter oilseed rape is also looking well for the plants that survived the winter. Difficult weather conditions caused some crops to fail as I needed to reseed 50 acres this spring.”
“We had a cold March and April but we got the spring crops sown in the third week of March. It was slow to come through the ground with such a cold and windy April and May. But in the last two to three weeks the barley has sped through the growth stages.
“Later-sown crops in May are struggling a bit and looking yellow. But overall I would say the potential is there for good crops but it is still early.
“The crops at the moment look lush which usually means there should be a decent amount of straw. If we get the sunshine and some rain between now and August then there should be good long straw crops.”
“Looking across Scotland, the further north, the better the crops. Drought stress in Fife, Lothian and the Borders has had an impact.
“We are seeing issues with yellow rust in wheat across the country which could become more of an issue once the flag leaf develops.
“The prolonged cold spell in spring followed by the warmth this last few weeks has caused crops to show signs of nutrient deficiency. The crop has been growing quicker than the nutrients can be supplied.
“We can see crops which have had nitrogen applied in smaller doses more often performing better than plants which had fewer but larger applications of fertiliser. Nitrogen approach has been key to success this year. If you use liquid fertiliser then this doesn’t mean you have more passes over the crop, though.
Yields for 2021 are down to sunshine and nutrition from now until the combines start rolling
“A standard eight-pass strategy can still be used but you just don’t isolate the nitrogen in the first two or three applications but add it into the mix more often, where possible.
“Yields for 2021 are down to sunshine and nutrition from now until the combines start rolling – we just need the sunlight. From what I can see the crops have recovered from winter well so the straw should be there to bale.”
Many malting barley growers will have signed contracts to supply grain at £170/t and above this harvest.
However, most contracts are split 50-50 between spot price at harvest and an agreed contract price.
Currently, feed barley ex-farm is selling for £190/t as the last of 2020’s crop is shifted. This is a long way from the £135/t malting price at harvest last year.
With rising costs of fertiliser, machinery and agrochemicals, many malting barley growers believe they need to be paid £200/t to be sustainable. The last few years good contract prices have tempted farmers to sign up with grain merchants but strong supply at harvest has meant price typically fall to give an overall price closer to £150/t compared to the £180/t and above which tempts farmer to sign on the dotted line.
If COVID-19 continues to weaken demand from distillers for grain, then many malting barley growers who have sheds will be tempted to store their grain and target the feed market.
With the price for oilseed rape going well above £400/t, many farmers are being tempted to think again about planting the brassica again.
This will put pressure on farmers who plant cover crops or green manures after a winter cereal
The Paris futures market has a November price of €509/t, which is well above the typical price of €350/t to €380/t in recent years. This will put pressure on farmers who plant cover crops or green manures after a winter cereal.
One option which is tempting many, according to Chris Leslie of AHDB, is to direct drill a crop of oilseed rape with clover before September. Select a seed which is disease-resistant and not too expensive which should be around £40/ha. But don’t spend on the sprays and fertiliser which is a saving of around £120/ha in variable costs. Then come spring assess whether the crop is good enough to follow through to harvest, or plough it in and put in a spring cereal.
The price of new machinery continues to rise on Scottish farms, which is pushing more farmers to use contractors.
This year’s recommended contractor charges according to agricultural co-op Ringlink Scotland are outlined in Table 1.