United Oilseeds Co-operative Announces £1.16 Million Pre-Tax Profit

United Oilseeds Co-operative Announces £1.16 Million Pre-Tax Profit
Posted: 30 Nov

(Pic: Chris Baldwin, Managing Director, United Oilseeds)

United Oilseeds Co-operative Announces £1.16 Million Pre-Tax Profit

Break crop specialist and independent farmers’ co-operative United Oilseeds has announced a pre-tax profit of £1,166,678 for the trading year 2019 to end June 2020. The farmer-owned co-operative also says it will announce a profits redistribution payment to its trading members by the end of the year.

The co-operative reported a turnover of £142,500,000 and saw its net worth rise to nearly £12m, at £11,888,545.

“This is a truly excellent set of results, achieved amidst particularly tough agronomic conditions, a volatile trading environment and a record decline in OSR plantings.” said Chris Baldwin, United Oilseeds Managing Director.

“The UK’s 2019 rapeseed crop was the smallest area harvested since 2003, as during its establishment in 2018, over 30% of the crop experienced severe damage or failure due to flea beetle.  This resulted in a lower than average yield figure of 3.3 t/ha – lower than the five-year average yield of 3.5 t/ha.

“But, despite a 12 % reduction in the harvested rapeseed crop area (from 595,000 ha in 2018, to 520,000 ha in 2019) United Oilseeds still traded nearly 400,000 tonnes of OSR and a  further a 73,689 tonnes of other break crops including beans, linseeds, oats and peas,” continued Mr Baldwin. “Our oats business was particularly impressive, with our 2020 trading tonnage increasing by 83 % on the previous year.” 

This strong performance has meant that United Oilseeds has increased its market share of the UK rapeseed market to over 25% and maintains its leading position as the company with the largest OSR tonnages under pool management in the UK.

“We will be announcing a profits redistribution payment to our trading members shortly and I am particularly pleased that the strength of our co-operative’s financial performance will benefit our trading members at a time when many farmers and organisations have seen their livelihoods and incomes hit by a combination of highly challenging issues including, flooding, pest attack, Brexit uncertainty and the coronavirus,” said Mr Baldwin.

Rapeseed Harvest, Plantings and Production Forecast

From a high point of 758,000 ha in 2012, the harvested area of rapeseed in the UK has continued to decline. In 2019, the crop area harvested was 520,000 ha and in 2020, United Oilseeds’ own grower survey shows the harvested area was down over 30% to 360,000 ha.

“We predict the rapeseed crop area for harvest 2021 will be down again, to 310,000 ha, said Mr Baldwin. “However, we believe this will be the “low water mark” for the last 10 years and expect OSR plantings and crop areas to rise in autumn 2021 and then again in 2022.  We expect 2021 OSR plantings to increase to 425,000 ha and to 500,000 in 2022.”

“I think it is fair to say that some farmers who have removed rapeseed from their rotations now wish they had drilled an OSR crop. In addition to far less flea beetle pressure in autumn 2020, we have seen market prices firming and we expect them to continue to do so,” said Mr Baldwin.       

“I recommend that farmers will do well to recognise they are growing for the home market and that there is a huge domestic demand for OSR, right here on their doorstep.  It is also important to appreciate that a rapeseed crop price can reach very attractive levels of over £400 per tonne,  especially if you choose the right variety - one with good oil content contributing to a gross output - and supply a crop that is within spec, clean and dry.”

As an example from last harvest, one of United Oilseeds farmer members achieved a value of over £418 per tonne for their crop once quality bonuses for admixture, oil and moisture content were added.  (Oil content bonuses are paid at 1.5% of the purchase price for each percent of oil content the crop produces above 40%, with further bonuses added for admixture and moisture levels.)  At a contract price of £360 and with applicable quality bonuses totalling £58.79, the value is £418.79 per tonne.  (See bonus breakdown below.)

Grower’s OSR Crop

Oil Content %

48.68 %

Oil Content Bonus at 1.5% of contract price for every one per cent above 40% = 13.02% bonus

£46.87

Moisture %

7.29%

Moisture bonus at 1% of the contract price for each one per cent below 9% = 1.71% bonus *

£6.16

Admixture %

0.40% Moisture

Admixture bonus at 1% of purchase price for every one per cent below 2% = 1.60% bonus

5.76

 

Total Bonus

58.79

Contract Price

 

£360

 

TOTAL PER TONNE

£418.79

*No moisture bonuses are applicable below 6% moisture

“An ex farm price of over £400 is very achievable and, in view of predicted UK planting and harvest levels going forward, we expect the market price will continue to improve still further,” said Mr Baldwin.

With yields for the 2020 harvest again below average, at 2.8 tonnes per hectare, there is a shortage in rapeseed supply for UK domestic use.  The usual UK annual usage is above 1.9m tonnes and UK OSR production from harvest 2020 is just 1,008,000 tonnes. With the crushing plant at Erith being shut down for four and half months earlier this year, we can estimate it crushed 450,000 tonnes less rapeseed than usual.  This means that Britain will need to import up to 500,000 tonnes of OSR from abroad. 

United Oilseeds believes this shortfall will continue and keep OSR prices firming. The 2021 rapeseed harvest (assuming an average yield of 3.5 t/ha and a crop size of 310,000 ha) will likely result in a production figure of around 1,085,000 tonnes, which will mean the UK will need to import rapeseed again, probably around 800,000 tonnes.                                     

“The fact that this significant shortfall of seed will be supplied by imports from some countries where the use of neonicotinoids to counter flea beetle is still permitted remains hugely unfair to UK farmers.  It means that we are importing seed that has been treated with a chemical that is not accessible to UK growers. This is a clear case of the standards demanded of UK farmers not being applied to goods imported from overseas.”

 

-Ends-

Note to Editors

United Oilseeds is one of Britain’s foremost national agricultural co-operatives. Owned entirely by its 4,500 farmer members, it is the UK’s only oilseed rape marketing specialist. In addition to OSR, it also trades linseed, oats and pulses and is the parent company of the expanding small seed specialist, Hubbards Seeds, which sells game cover, catch crops, grass and maize.                                                                                                      

 

For further press information

Edward Meadows
United Oilseeds
Tel: 01380 729200      
M: 07500 224 137      
E: edwardm@unitedoilseeds.co.uk