British Farmers Face Economic Devastation as US Ethanol Trade Deal Looms

Strategic Insights -

The announcement of the UK-US trade deal, set to remove tariffs on 1.4 billion litres of US-produced ethanol, has put the livelihoods of 12,000 farmers who supply wheat to UK bioethanol plants at risk. Vivergo Fuels, the largest bioethanol plant in the UK, has warned that it will be forced to shut down without urgent government support, affecting rural economies and the country's food security.

Key Takeaways:

  • The UK-US trade deal eliminates tariffs on 1.4 billion litres of US ethanol, equivalent to the country's entire current demand, rendering domestic production economically unviable.
  • Vivergo Fuels, the largest bioethanol plant in the UK, will be forced to shut down unless the government intervenes, affecting 12,000 farmers who supply wheat to the plant.
  • The loss of the bioethanol market will remove a critical pillar of rural economies, wiping out confidence in local investment and employment.
  • Farmers will face a "double hit" of reduced prices and lost access to value-added supply chains, potentially forcing them into a loss-making position.
  • The bioethanol industry is a key customer for British feed wheat and plays a crucial role in the UK's energy and food security.
  • Recent changes to inheritance tax rules and the Spending Review's slashing of funding for farmer support schemes have further intensified pressure on UK farmers.
  • The National Farmers' Union (NFU) has raised the alarm over the deal, warning that its members are deeply concerned about the scale of imported ethanol now being allowed into the UK market.

Statistics:

  • 1.4 billion litres: the amount of US-produced ethanol that will be imported duty-free under the UK-US trade deal, equivalent to the country's entire current demand.
  • 420 million litres: the amount of bioethanol produced by Vivergo's Saltend plant in Yorkshire each year, supporting an estimated 1,220 farming jobs across the North East.
  • 45%: the percentage of CO2 currently imported by the UK, with the remaining 55% being produced domestically.
  • 2 million tonnes: the amount of biofuel demanded by the British agricultural sector per year.
  • 12,000: the number of farmers who supply wheat to Vivergo Fuels, a key customer for British feed wheat.

Sources:

  • Vivergo Fuels internal briefing, seen by The Telegraph
  • The Telegraph report on the leaked internal memo
  • National Farmers' Union (NFU) statement on the UK-US trade deal
  • Government spokesperson's statement on the UK-US trade deal
  • The Telegraph report on the potential supply crisis caused by the UK-US trade deal