Co-op approach offers access to premium wheat markets

Joining a grain storage and marketing co-op is one way to access premium markets and Camgrain is adding value to its wheat by viewing it as a food ingredient rather than grain.

Farmer-owned Camgrain currently has 500 farmer members who are collectively benefitting from contracts with leading food manufacturers.

“We aim to add value where possible,” explains Simon Ingle, senior trader at Openfield, who markets all grain for Camgrain. “Only a handful of tonnes go for feed.”

He points to 2011, when 98% of grain left the co-op with a premium. Even last year, with the very low specific weights issue, most wheat leaving the stores met the criteria for quality markets.

But what are the premiums worth? Mr Ingle highlights that in 2012, the average premium for Group 3 wheat was £28/t above feed base value.

One key development enabling the co-op to access premium contracts with breakfast cereal manufacturers is the £1.5m investment in its Clean Wheat Processing facility at the Balsham site, near Cambridge.

“It is effectively a series of specialist cleaners that process wheat into a food-grade ingredient,” says Philip Darke, managing director of Camgrain. 

Specialist vehicles then take the processed wheat straight to the food factory as and when required, on a just-in-time basis.

“It means we are offering a food ingredient supply service rather than just being grain suppliers. These food manufactures don’t have the space or desire to store raw grain,” he says.

The cleaning plant uses sieves as well as advanced technology such as UV-light sorting of individual broken grains, glass and diseased grains with ergot. The optical sorter can monitor 120,000 grains a second. 

Camgrain’s Clean Wheat Processing facility is accredited by the British Retail Consortium as Grade A, which is crucial since key manufacturers such Nestle will only source BRC-accredited grain to make its breakfast cereals, explains Mr Ingle.

Grain is marketed by Openfield to a range of food manufacturers, major retail chains and millers. “Our role is to identify new markets and opportunities, one example being Sainsbury’s.” 

All Group 2 and half of the Group 1 wheat goes to supply Sainsbury’s in-store bakeries, which are all baking bread using UK-sourced wheat.

The rest of Camgrain’s Group 1 wheat goes to other bakers, via millers such as Whitworth Brothers, based near Wellingborough.

Group 4 hard wheat goes for the manufacture of packet flour sold in Sainsbury’s stores.

There are also premiums for malting barley, supplying the world’s largest spirit and whiskey manufacturer, Diageo, as well as other major maltsters 

You don’t have to be a member of Camgrain to secure bread-making premiums, but one key advantage of being with Camgrain is that even with a good harvest, market-leading premiums are still being paid. “This is because of the long-term relationships we have with customers such as Sainsbury’s,” explains Mr Ingle.

For member and Northamptonshire grower Andrew Pitts, this gives him certainty. “I have the confidence to grow milling varieties.

“I only grow Group 1, the rest being Groups 4s for seed production, so I need certainty of a premium. There is a lot of bread-making wheat grown in this area.”

But it’s not just about securing premiums – being a co-op member also means having access to a dedicated haulage, drying and storage service. This can be particularly appealing to those taking on extra land with minimal or no grain storage.

One grower who faced this dilemma four years ago was Len Brookes, who was expanding his cropping area to the present 1,400ha in Northamptonshire. Now about 20% of his wheat tonnage goes to Camgrain.

“I was taking on additional rented land which didn’t have any storage and I briefly looked at expanding my own storage by an extra 1,000t. But I couldn’t get very enthusiastic about erecting storage on rented land without financial help or security.

“I found that I could buy drying and storage with Camgrain at about half the cost of building my own facility.”

He points out that landlords are often reluctant to put any capital into buildings and drying capacity. “It makes no sense for me to invest money into facilities on land rented through short-term agreements.”

In addition, his existing storage is based on drying floors, which are very time consuming to manage, to condition and maintain grain.

So he joined Camgrain, with 60% of his land within five miles of the Kettering site and the rest no more than 20 miles away.

He also sees the co-op as an additional marketing tool, helping him to spread the risk, as he sells the other 80% of his wheat to local merchants and traders, with a mix of forward and spot selling throughout the season to try to obtain a good average. 

“I always try to obtain a minimum premium for my milling wheat before I drill it,” he says.

Of his 800ha of wheat, half is Group 1 bread maker Solstice and the rest is made of barn-busting Group 4s, including KWS Santiago and Kielder, plus JB Diego as a second wheat. 

At harvest, Mr Brookes prioritises higher-moisture crops, taking advantage of Camgrain’s modern and energy-efficient dryers. 

“I can cut crops once they are ripe before quality starts to decline, as moisture is now less of a consideration. Before, I was more reluctant to start cutting when wetter, having such limited drying capacity.”

Timeliness

Mr Pitts also sees timeliness as the key advantage of using Camgrain, with efficient haulage available and no need to spend time drying and managing stores.

“Leaving grain haulage, drying and marketing to the professionals means you have more time to concentrate on establishing the next season’s crop and ensuring it gets off to a good start.

“Being able to cut crops that bit earlier means having more time to work the ground for establishing the next crop and also having a bigger window for blackgrass control. 

“We have more ground to cover with fewer staff, so having an extra two to three days is valuable for establishing the next crop. There is more time to plan and we make fewer mistakes.”

He joined in the wet summer of 2008 when he had huge yields of wet grain. “We were struggling to dry 600t of Group 2 Einstein wheat and would have lost it.

“We can store everything we produce in a normal year ourselves, but it doesn’t make commercial sense and many older dryers struggle to keep up with modern combines,” says Mr Pitts. 

Looking to the future, Mr Darke explains that Camgrain is in merger talks with Wiltshire Grain, which will potentially increase membership from 500 to 650, adding an additional 100,000t of storage at a site near Stonehenge.

“We would hope that as farmers increasingly understand the importance of co-operating, membership will continue to grow substantially.” 

As more farmers join, the co-op will expand across all four sites with planning permission for an extra 250,000t already in place A wheat cleaning plant is also planned for the Kettering site, which will expand the co-op’s food ingredient offering.

Camgrain in figures