Supply chain inefficiencies are costing the UK cereals industry almost £1 million a week, according to a report, Against the Grain, which was commissioned by farmer-owned grain marketing business Centaur Grain and prepared by English Farming & Food Partnerships.
It identifies gross inefficiencies within the cereal supply chain and for the first time quantifies the annual cost to the industry as at least £40 million.
It quantified failures in five key areas: Rejected loads, £3m; Unnecessary waiting times, £15m; Fragmented haulage industry, £15m; Inefficient storage strategies, £1.5m – £3m; and Unnecessary multiple testing, £2m.
It said that because of the structure of the industry, it was the farmers who bear the bulk of these costs, which equate to around £2 per tonne.
The logistics part of the chain is singled out as the best opportunity for improvement, as it makes up the bulk of the £40m inefficiencies reported.
Malcolm Parkinson, managing director of Centaur Grain says: “Blinkered vision is denying the cereals industry a potential £40m windfall. An empty lorry can pass by the end of a farm, because there is no culture of collaboration, leading to huge wastage. The industry urgently needs a constructive dialogue on how this can be improved.”
The report concludes that bridging the chasm between best practice and current cereals industry practice requires a fundamental change in business culture, strategic vision and industry structure. Finding a partner or partners in the supply chain is key to a more profitable future for farmers.
It also argues that supermarkets have been successful in improving the efficiency of operations at the front ends of their businesses but have shied away from tackling the chain upstream.