The 2022 harvest across the UK led to an average higher yield and price for many cereals from the Wheat, Barley, Oats and Oil-seed Rape crops. This rise has been reflected internationally with the global price of grain increasing from the 2021/2022 harvest. Various factors have contributed to the increased price both within the UK and internationally, with increased production costs throughout the supply chain, greater demand due to bad harvests internationally, impact from climate change, the War in Ukraine, as well as the breakdown of the United Nations export grain deal from the black sea in recent weeks. These global effects have resulted in the second largest fall in total grain outputs on record, with the EU production of grain stocks expected to hit a 15-year low.
The fall in international grain outputs has certainly contributed to an overall increase in grain price, however, this price rise has been dwarfed by increased production costs (soring fertiliser and fuel prices will be news to no one), along with increasing inflation in the UK now above 10%, already affecting businesses margins over the last year. The sector also faces a projected 2-year recession and market uncertainty along with ongoing production costs and supply chain issues. Furthermore, the continued war in Ukraine will potentially impact on the future grain supply for the 2023 harvest, as many fields have not been sown with next year’s crop due to the ongoing conflict. The wide-reaching impact on other international markets and the subsequent effect on the UK, will be for many businesses to endure over the coming winter and into next year.
Coupling these financial issues with current changes in the sector from the ongoing Land Reform bill consultation, greater interest in land for carbon credits and commercial offsetting measures, to the current rent freeze legislation, has created an increasingly complex landscape for rural businesses to operate within. We can provide detailed and reliable advice on navigating your rural business through the ongoing economic uncertainty. Please get in touch with our expert team to discuss your matter further.