Europe’s animal feed sector is still striving to work through the many trading and related challenges created by Brexit, according to the Northern Ireland Grain Trade Association (NIGTA).
However, in relation to the Northern Ireland Protocol, the NIGTA has confirmed that the measure is largely working in the feed industry’s favour.
“We are an all-island sector. The free flow of feed and raw materials across the island is vitally important,” Gill Gallagher, chief executive of NIGTA said.
“However, NIGTA members fully recognise that the protocol is causing difficulties for some sectors in Northern Ireland that are very dependent on the import of products and materials from the rest of the UK.
“It is vitally important that all problems in this regard are resolved as quickly as possible.
“But in doing so care must be taken to ensure that measures intended to resolve East-West trade do not end up compromising North-South trade freedoms as a result.”
Gallagher has confirmed that international feed and fertiliser markets are likely to remain volatile over the coming months.
Contributing to this situation are a number of key factors: The war in Ukraine, the impact of the weather on international crop yields, rising energy costs and fast-changing currency exchange rates.
The chief executive of NIGTA recently addressed members of the Northern Ireland Institute of Agricultural Science (NIIAS).
She told institute members that Ukraine traditionally represents an important source of maize for lrish feed compounders during the first four months of a normal calendar year.
“But sourcing this product during 2023 depends on the Black Sea Grain Initiative, signed by Ukraine and Russia on July 22, this year, being extended beyond November 19,” Gallagher explained.
She said there was however, no guarantee that this would happen.
“Russia walked away from the current arrangements on October 29, and then agreed to come back in again, a couple of days later. But this action did have a destabilising impact on world grain markets for that very short period of time,” the chief executive of the NIGTA added.
“The island of Ireland has limited storage capacity where grains are concerned. So buying forward and putting it in store now, for use early next year, is not an option.
“Many countries produce maize. But the growing practises followed in many regions greatly restrict the purchasing options that are available to local importers and feed mills.”
Gallagher said that while Ukraine has redoubled its efforts to get grains and oilseeds out of the country using road and rail options, one key problem is the fact that rail gauges in the country differ from those used in neighbouring countries.
She said this means that grain shipments have to be unloaded and physically transferred to other containers once they get to Ukraine’s borders.
“The limitations these procedures impose on the actual tonnages of grain that can be taken out of Ukraine by rail are obvious.
“The Black Sea route will remain the most effective means of exporting produce from the country. And time will tell how agreements arrived at between Russia and Ukraine will evolve over the coming months.”
Gallagher also confirmed that drought conditions impacting many parts of the world had led to significant reductions in crops yields this year. North America, South America and many parts of Europe had all been affected in this regard.
“But it’s not just a case of the drought impacting on actual crop yields,” she said.
“Falling river levels in places like Argentina and the Mississippi River basin in the US have physically prevented cargo boats from accessing harbours, causing delays and increasing shipping costs.”
Northern Ireland’s feed mills sources most of its cereals from the UK and Ireland. However, soya comes from North and South America and currency fluctuations can have a major impact.
“Northern Ireland’s animal feed compounders are reliant on international markets throughout the year.
“As a result, currency fluctuations can make such a big difference to the prices paid in sterling for a large number of the raw materials used in compound feed specifications,” the NIIAS chief executive warned.
According to the association, NIIAS members were told that currency fluctuations had added almost £74/t to the price paid for soya coming into Northern Ireland form the US over the past 12 months.
“In fact, currency issues alone have added £13/t on to the price paid in sterling for soya over the past week,” Gallagher said.