This year's total UK wheat quality is one third lower than the average for the last three years, beating already pessimistic predictions, with premium milling wheat down by 43 per cent, according to results of the Cereal Quality Survey conducted by the Home Grown Cereals Authority (HGCA).
The northern counties and Scotland have been worst hit after they faced the brunt of the summer rain, and all regions have less bread-making wheat than the national three-year average, despite the UK harvesting an extra 1.4 million tons in 2004.
Market centre bread wheat prices were last week estimated at £85 per ton across the UK, with a spot price of £102 per ton delivered to Liverpool, and have almost risen as much as they can before it becomes more economical for millers to use imports instead, according to HGCA economist Josh Dadd.
Coupled with high wheat prices, many millers are likely to face rising transport costs as they source wheat from further afield to simply get what they need. HGCA data analyst Rupert Somerscales said: "With such a poor wheat crop quality this season the incidence of suppliers failing to meet minimum contract specification has risen."
The HGCA is expecting all millers to import more wheat over the next year and those in the northern UK will also have to bring more wheat up from the south because of the disproportionately poor harvest in northern counties and Scotland.
The UK milling industry annually uses around two-and-a-half million tons of home-grown wheat for bread making and about another million tons for other bakery products, such as biscuits and cakes.
"As a result, haulage rates between the north and south have reportedly risen as more lorries are asked to undertake this longer journey," said Somerscales, adding that the HGCA would have the results of its haulage survey soon.
Rising costs for millers may lead to price increases being passed on to customers in the bakery industry - something one northern UK miller, Carr's, has already made part of its strategy following a 60 per cent increase in wheat prices in the eight months up to January 2004.
Carr's chief executive, Chris Holmes, said that after last year's huge wheat price rise the company was learning to cope and could "manage the wheat situation through high quality wheats that we import".