Blackfriar: Alkane’s power play but government must act to plug gap

The news that methane miner Alkane Energy is to buy Maltby colliery’s methane reserves is good news for the industry.

While it is tragic that the mine was forced to close in March following safety issues, it is good that Alkane’s £7.5m acquisition will enable the company to provide power for up to 14,000 homes.

The deal comes at a time of great uncertainty about the impending energy crunch.

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The UK’s surplus energy capacity is expected to fall from 30 per cent to between five and 10 per cent and there are real fears we could see a return to the power cuts of the 1970s as soon as 2015.

While Alkane is doing all it can to alleviate the problem, it is a smaller player in energy provision.

The Maltby deal will enable it to supply power to around 80,000 UK homes.

However with an estimated 20 million UK households this is unlikely to have an enormous impact.

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The real problem is the Government’s attitude to the power shortage.

It has started around a dozen initiatives including looking at the North Sea, shale gas, the Green Bank and the Green Deal, but none of these have got very far.

Analysts believe it should focus instead on two or three key areas that are likely to fix the gap.

Alkane is doing all it can to help overcome the shortfall by taking over more disused coal mines, but the Government needs to take action swiftly.

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Upmarket sausage maker Cranswick must be as happy as one of its free roaming pigs in clover.

The Hull-based company has pulled off an impressive feat.

During one of the worst economic downturns in living memory, its commitment to investing in its facilities has allowed it to scale back costs and stay competitive.

This week it reported an eight per cent increase in underlying pre-tax profits for the year to March 31 to £49.3m on the back of a seven per cent rise in revenues to £875m.

Underlying sales rose five per cent.

This is despite the business facing a number of challenges over the last 12 months, including the impact of high feed prices. The high prices led to record pig prices, with the price peaking in December 2012 at 161p per kilogramme, a level it has stayed at.

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Cranswick was able to cope with this because it has spent £125m on investment in the business over the past five years.

Now the group has high hopes for its export operations

Its Hull and Norfolk factories are benefiting from approval to export meat to China and more recently to Australia.

The group already exports ribs to the United States.

Cranswick is seeing growing demand from China. The Chinese market traditionally wanted offal and trotters, but now there is a move to more expensive parts of the pig as wealth increases and the Western diet becomes more fashionable.

Export sales now account for five per cent of group revenues.

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Chief executive Adam Couch wants to double that to 10 per cent over the next three years.

Cranswick ships 16 25-tonne containers to the Far East every week and shipment of premium cuts to Australia is imminent.

The Kiwis may ship New Zealand lamb to the UK, but now Cranswick is sending some of its pig herd to Australasia.

There was also good news for Cranswick’s local farmers.

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The group said new rules that put the rest of Europe on the same strict welfare standards as the UK will boost British pig farmers.

For the last decade, EU pig farmers have been allowed to breed sows that are kept in stalls throughout their entire lives, whereas British pigs are free to roam and demonstrate normal behaviour.

But new EU rules have come in that will force European farmers to adopt the same higher welfare standards that the UK introduced 10 years ago.

Mr Couch said the changes will help equalise pig prices between the UK and the Continent as until now EU pigs could be produced far more cheaply as UK farmers had to spend more on animal welfare. British farmers have little to cheer about at the moment but this is good news for the sector, especially in the light of the horse meat scandal.

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Mr Couch said that the group would never hope to benefit from such a shocking revelation, which has rocked the whole British meat industry.

However, it has been beneficial to pork sales and Cranswick came out of the scandal unscathed after rigorous testing.

Some 70 per cent of its pigs come from within a 50-mile radius of the group’s fresh pork sites in Hull and Norfolk.

Both are of significant importance to the local farming communities in each region.

Cranswick has stayed true to its local farming roots.