London, Oct 10 - Biofuels should provide the first major new use for British grain in 30 to 40 years, good news for farmers but a significant concern for the crops' traditional users, millers and maltsters.
"Probably the biggest concern at the moment...is biofuels and the impact on the (flour milling) industry," Gary Sharkey, head of wheat procurement for Rank Hovis said on Tuesday.
Sharkey told a conference organised by the Home-Grown Cereals Authority that the milling industry was worried that farmers would switch to growing more high-yielding feed wheat varieties and less milling wheat.
Biofuels can be made from a wide range of crops including grains, oilseeds and sugar cane. They are seen as substitutes for fossil fuels and as a way to reduce the emission of greenhouse gases believed to contribute to global warming.
"We are quaking in our boots a little bit," Sharkey said.
Rank Hovis is a unit of RHM plc . Bill Dobson, a sourcing manager for Coors Brewery Ltd, expressed similar fears.
"The major concern (for maltsters) going forward is the availability of malting barley. Biofuels are the main thing driving against the availability of malting barley," Dobson told the conference.
Coors Brewery is a unit of Molson Coors Brewing Co.
LESS BARLEY
The amount of barley grown in Britain has been shrinking in recent years, a trend expected to continue as the crop is replaced by crops such as wheat and rapeseed which can be more easily used by the biofuels sector.
UK barley area for this year's harvest dipped 6.2 percent to 880,000 hectares and analysts expect plantings to drop further next year. Barley area has fallen almost 30 percent during the last five years.
John Page, chairman of the HGCA, said biofuels provided the first major new use for British wheat since the rapid expansion of the poultry sector in the 1960s and 1970s.
"We can see it (biofuels) fairly easily taking four million tonnes of grain and oilseed out of the British market," Page said, adding that would match the current amount of grain used by the poultry sector.
Such a level of use by the biofuels sector would wipe out Britain's exportable surplus.
Britain exported 2.28 million tonnes of wheat and 612,054 tonnes of barley in 2005/06 (July/June), according to official customs data.
Alastair Dickie, Director of Crop Marketing for HGCA, said the recent sharp rise in world wheat prices and weakness in energy markets meant the economics of building a bioethanol plant in Britain using wheat as a feedstock "aren't as attractive as they were before."
Dickie said, however, he was confident about the future of the biofuels sector.
"I don't have any fears that this is going to knock the biofuels industry off course...I am not guaranteeing that everyone will have a safe journey. What I am saying is that biofuels are here and they are going to stay," he said.