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Hunger for biofuels will gobble up wheat surplus

The Times

October 5, 2009

Europe’s largest bioethanol refinery on Teesside will consume a tenth of the country’s annual harvest when it is built

Robin Pagnamenta, Environment and Energy Editor

Britain’s self-sufficiency in wheat will end next year, because a giant new biofuel refinery needs so much of the staple crop that home-grown supplies will be exhausted feeding both the factory and the nation.

The £300 million plant at Wilton, on Teesside, which is due to open this autumn, will be the largest bioethanol refinery in Europe and will consume a tenth of the country’s annual harvest, more than the national surplus.

Although the Ensus-built refinery expects to source all its wheat from the UK, the National Farmers’ Union (NFU) said that so much grain would be required that Britain could become a net importer of the crop for the first time in its history.

Wilton will require 1.2 million tonnes of the crop to produce 450 million litres of wheat-based biofuels. Built with capital supplied by Carlyle Group and Riverstone Holdings, the American private equity companies, it will supply Shell with the renewable fuel for use in cars and lorries in Britain.

The British wheat harvest this year is expected to be just under 14 million tonnes, but, in a poor harvest, can fall to as low as 12 million tonnes. In recent years, UK wheat exports — which equate to the size of the annual surplus — have averaged between 500,000 and three million tonnes a year.

The huge extra demand created by the Ensus plant and another similar-sized refinery being built by BP in Hull will sharply cut net wheat exports from the UK. The two plants will consume about 2.3 million tonnes of so-called feed wheat between them every year, up to 19 per cent of the total UK crop.

In a poor harvest, Britain may need to meet domestic demand by shipping in extra supplies from other producers such as Canada or France, Ian Blackhouse, chairman of the NFU’s combinable crops board, said. “It’s more likely that we would have to import high-quality bread wheat.”

However, Mr Blackhouse welcomed the opening of the plants, saying that it was good news for British farmers and would help to support grain prices.

Demand for bioethanol is surging because of the Renewable Transport Fuel Obligation, which requires 5 per cent of all vehicle fuel to come from biofuels by 2014.

Mark Worrell, head of wheat at Openfield, a company that acts as a middleman between farmers and wholesalers, said: “It will change the dynamics of supply and demand. In the UK we still have a surplus of grain for export, but UK demand is now going to increase.”

Sir Rob Margetts, the chairman of Ensus, said that the plant was almost ready to enter operation and was undergoing final tests. As well as producing vehicle fuel equivalent to about 2 per cent of all the petrol consumed in Britain, the plant will produce 350,000 tonnes of high-protein animal feed.

He said that this would significantly cut the amount of soy-based feed imported to Britain from Brazil, much of which is grown on cleared forest land. The plant would use only low-quality wheat typically used for animal feed rather than higher-grade milling wheat that is used to make bread.

Environmental campaigners have voiced concern about the planned biofuel plant. A spokesman for Friends of the Earth said that the organisation was opposed to the use of biofuels in petrol. “Using wheat for fuel involves the displacement of agricultural land used for food production. At the end of that displacement chain you need to create new farmland and that usually means cutting down forests.”

BP and Associated British Foods are building the other bioethanol plant, in Hull, at a cost of £200 million. It is due to open next summer and will produce 420 million litres per year, consuming 1.1 million tonnes of wheat per year.

Another, bigger, plant is being built in Rotterdam in the Netherlands, which will produce about 480 million litres per year.

Production by numbers

13.9m Tonnes of wheat expected to be produced in the United Kingdom this year

666m Tonnes forecast worldwide for 2009 to 2010

19.7% Decline in the amount of wheat produced in the UK in 2009, compared with 2008

14% Overall fall in production of cereals in the UK this year from 2008

50% Expected fall in wheat yields in South Asia from 2000 to 2050 as a result of climate change

439,000 Tonnes of wheat exported by European Union countries last week

Source: National Farmers Union, International Grain Council, International Food Policy Research Institute and the EU

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