Threat of hike in animal feed prices as soya demand soars

Livestock producers could face higher feed prices and squeezed margins in the coming months, the Agricultural Industries Confederation (AIC), has warned.

The price of soya – one of the main proteins used in animal feeds – has soared by £85 a tonne to around £340 a tonne over the past 16 weeks, Scottish feed committee chairman, Ian Oliver, told an AIC press conference yesterday in Edinburgh.

“We were looking for prices to ease at the beginning of the year but the market is extremely volatile,” said Oliver. “Soya prices have escalated on the back of dry weather in South American which has adversely affected yields, increased demand on the world market from China and a switch from the growing of soya beans to maize in the USA.

“This will inevitably put pressure on the livestock sector, along with rising fuel and fertiliser prices.”

Pig and poultry producers were likely to feel the brunt of the increase but it was also a concern for dairy farmers in the face of threatened reductions in the ex-farm price of milk.

However, the continuing buoyancy of the market for red meat would give beef and sheep producers a measure of protection.

There was good news for arable farmers from arable spokesman Peter Gray, who said the strong demand for malting barley was likely to continue as whisky distillers expanded to meet soaring world-wide demand for Scotch whisky. But he warned that the marked increase in the acreage of barley sown in Scotland this spring might temper any prices increase.

He said: “With reductions in the areas sown of wheat, oilseed rape and oats and the ploughing up of many thousands of hectares of grass this spring for the sowing of barley, the supply of barley from this year’s harvest – barring poor weather – will be plentiful.”

AIC is also fighting a European Union move to limit the inclusion of urea in animal feedstuffs, such as molasses licks, liquid feeds and pour-on liquids used to boost the feed value of poor forages, to only 3 per cent.

Some concentrated supplements in the UK contain as much as 20-30 per cent urea and most blocks and liquids are in the 5-10 per cent range.

“The EU has failed to take into account the situation in the UK where urea is an important component of many feeds,” said AIC Scotland chairman, Ian Henderson. “Most urea in the rest of Europe is used as a fertiliser and there is no understanding of its use as an animal feed.

“The proposed change just doesn’t make sense and would have a particular impact in Scotland.”