UK wheat sowings, after slumping to their lowest in decades thanks to sodden planting conditions, will stage their biggest recovery this century, Origin Enterprises said, foreseeing a boost to its agronomy operations.
UK wheat area - which for the latest harvest slumped by one-quarter, after persistent autumn wetness in 2019 prevented sowings – will rebound by 435,000 hectares for the crop currently being seeded, the group said.
That would return area to 1.80m hectares, in line with the five-year average ahead of the latest harvest, although below highs earlier in the century above 2.00m hectares.
The UK has in the past decade seen some switch away from winter crops towards spring-sown ones, thanks in part to the growing popularity of silage maize, including for use in biodigesters, but also to allow farmers an autumn window to tackle black grass which has become an increased weed threat.
‘Plantings to normalise’
“We expect crop plantings to normalise” for the 2021 harvest, said Irish-based Origin Enterprises, owner of the Agrii agronomy chain.
The comments are in line with those from the AHDB bureau, which has suggested a return to area “close to the average of the previous five years”, while showing milling wheat as offering the best gross margin prospects among winter-sown crops, at £712 per hectare.
Winter feed wheat was ranked third, at £646 per hectare, with rapeseed second, on £652 per hectare.
“There is still a strong incentive to plant oilseed rape for harvest 2021, although as we know pest pressures and a reduced arsenal with which to combat them has reduced the attractiveness of the crop in recent years,” the bureau said.
Origin Enterprises said that the prospect of a recovery in sowings in the UK, the group’s biggest market, would “increase demand for agronomy services and crop inputs, and return the group to growth”.
This following a year to the end of July when earnings halved to E32.85m, on revenues down 11.6% at E1.59bn, reflecting the reduced UK demand for agronomy advice and the likes of seed and fertilizers.
Underlying operating profits in the UK and Ireland division slumped by 61% to E23.3m, on revenues down 16.5% at E967.9m, which Origin Enterprises termed a “disappointing performance, as a result of extremely challenging conditions”.
However, the group flagged tests yet to its prospects for the year to next July, from the Covid-19 pandemic, and also from departure of the UK in earnest from the European Union in January, following the so-called “transition” year of 2020.
“With the possibility of Brexit without a trade deal on December 31 and the ongoing Covid-19 pandemic, [the financial year] will bring challenges for the group,” the company said.
“Given the macro environment, Origin will continue to implement a prudent risk management approach and capital allocation strategy.”
On Brexit, the company said that “all appropriate steps have been taken, and scenario planning completed, to ensure the group is adequately prepared in the event of a no deal scenario”.
‘Highly competitive conditions’
Origin Enterprises also reported a “disappointing” result for the year to July from its Ukraine business, amid “highly competitive trading conditions and volatile currency movements”.
In Romania, it achieved a “satisfactory result”, in line with that the year before, helped by amalgamation of operations in the country under the Agrii brand.
The Polish division “delivered an improved performance… supported by solid cropping area”, with the country among the EU’s best grain production performers of 2020.