Economics of growing UK milling wheat

Learn about the fundamentals of milling wheat economics, including commodity price drivers and production risks and rewards.

The interaction between demand and supply influences the price and quantity in any market, including milling wheat commodities.

As flour-based products are an important part of many UK diets, there is a strong and stable demand for milling wheat.

This consistent demand underpins confidence in the UK market and encourages continuous investment in domestic milling production capacity.

Flour millers use about 5 million tonnes of wheat in the UK each year, with most of this coming from domestically produced grain.

The location of UK flour mills provides an indication of the main centres of milling wheat demand, which can be viewed on the UK Flour Millers (UKFM) interactive mill map.

The map also provides contact information to encourage discussions with millers about specific requirements, such as preferred wheat varieties, typical specifications and potential premiums.

To maximise income from milling wheat, it is important to grow for a specific market.

The Recommended Lists for cereals and oilseeds (RL) presents milling wheat varieties within three UKFM groups (1 to 3).

Due to their milling quality and consistency, UKFM Group 1 varieties command the highest premiums, and it tends to be the most widely grown group.

The AHDB Planting and Variety Survey includes GB wheat area percentage estimates.

For harvest 2026, the area estimates were Group 1: 23%, Group 2: 16% and Group 3: 12%. The remainder was mainly Group 4 (44%).

UKFM Group 1 grain production dropped by more than a million tonnes between 2021 and 2025 (according to calculations based on AHDB and Defra data).

In terms of area, the Planting and Variety Survey showed that the Group 1 share of the GB wheat area fell from 29% to 19% over this period.

There are several reasons that underpin this reduction.

For example, the yield gap between the highest-yielding Group 4 feed varieties and the highest-yielding UKFM Group 1 varieties has widened in recent years, making the former more attractive.

Additionally, the UKFM Group 3 area has expanded recently. This is partly due to the increased performance of varieties in this group, including stronger yields, better agronomic performance and good protein quality, as well as providing a range of market options (including distilling).

For harvest 2026, UKFM Group 3 variety Bamford was cited as the most popular GB wheat variety in the Planting and Variety Survey (estimated at 12% of the total GB wheat area – the largest share held by Group 3s since 2014).

Production risks are also relatively high for bread-making varieties. For instance, most UKFM Group 1 samples in the annual AHDB Cereal Quality Survey do not meet all three key grain quality specifications: protein content, specific weight and Hagberg Falling Number (HFN), with significant seasonal variability recorded.

Attention to detail will improve the likelihood of securing milling premiums.

Milling wheat prices generally track feed wheat prices, which are highly influenced by global market movements.

However, they are not locked together, with specific supply and demand drivers determining milling premiums (over feed wheat).

The Corn Returns (the longest-running domestic price series for grains) show the average ex-farm prices received by farmers for cereals.

The prices reflect grain delivered/collected within the current month (regardless of fees, such as haulage).

Although milling premiums can start from as little as a few pounds, the five-year average milling premium was £26.62 (ex-farm, spot price), according to AHDB data (July to June marketing years 2018/19 to 2022/23).

Premiums can go much higher. For example, a premium of £62.07 (ex-farm, spot price) was recorded in the 2023/24 marketing year (the highest since at least 2000/01).

Typically, higher premiums are associated with restricted supplies of high-specification wheats.

Note: Premiums associated with forward delivery can be very different to those based on ex-farm prices.

Winter wheat that achieves milling specifications often features at or near the top of combinable crops gross margin tables, especially when milling premiums are strong.

When the harvest 2027 indicative gross margins were released (June 2026), they showed that just a £3/t improvement in milling wheat margins would have put it at the top of the table (overtaking feed wheat).

The decision to grow milling wheat is easier when:

• Milling wheat premiums are relatively high (compared to feed wheat prices)
• Varieties perform consistently well (on both yield and quality)
• Input prices are relatively low (e.g. nitrogen fertiliser in bread wheats)
• The farm can adapt well to in-season pressures (e.g. agronomy and harvest)
• The farm has a good success rate of growing milling wheat*

*If specifications are usually met, it indicates that the farm’s approach to growing milling wheat is appropriate.

Where they are only occasionally met, it highlights the need to adjust management to increase consistency or to revert to a feed wheat strategy.

It is not worth chasing higher premiums if you are unable to deliver the grade.

Many millers buy on forward contracts from merchants and co-ops, which can identify the best home for milling quality varieties.

Farmers should discuss contract options with buyers, including available premiums to offset the extra costs/reduced yields associated with milling varieties.

Note: Contracts often include discount scales (fallbacks) for grain that does not meet the required specifications.

The price of wheat only accounts for 11% to 15% of the price of a standard 800 g loaf of white bread, according to an AHDB analysis.

The other aspects that contribute to bread prices include bakery production processes, other ingredients, packaging, marketing and transportation.