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Growers Told Not to Gamble on Cereals Profitability

With higher grain prices hitting the headlines, NFU Scotland has called on growers not to gamble with the market and risk losing out on much needed revenue. 

It is stressing to all cereal producers the importance of knowing the quality of their crops then actively marketing what they have produced.  For the best result, they should monitor current prices, take account of market analysis and seek out expert advice.  The alternative of simply accepting spot market prices is unlikely to be the best plan.

The Union is also asking growers to draw on their experiences of the 2007 harvest and to consider how best to take advantage of the current spike in prices.

NFUS Combinable Crops Committee Chairman John Picken said:

“Growers need to respond positively to the current rising market by having a flexible marketing plan in place.   The alternative of just taking what’s offered on the spot market for the whole of the year’s production is simply gambling.   And very few gamblers end up as winners.

“We only need to think back to three years ago when grain prices rose to more than £200 per tonne due to shortages in the wheat market.   That year many growers were caught unawares by the rapid changes in price and as a result were unable to realise as much for their crops as they should have.   That was particularly disappointing, as prices had been below the cost of production for a long time before the 2007 harvest.

“With the ongoing volatility in global, European and UK grain markets, few can predict where prices will end up, but there will undoubtedly be much needed opportunities for growers to take advantage of this harvest.   But to do so, they have to know the quality of their grain, what their grain is truly worth and they also need to consider protecting themselves from price changes.

“Knowing what your grain is worth means accurately assessing the quality of what is coming off the combine and keeping abreast of prices, both delivered and futures! All growers should ensure they receive the HGCA’s regular updates on prices and market analysis – as levy payers, it is an invaluable service that we help fund so let’s make use of it.

“When it comes to selling the crop, having a flexible marketing plan that could include forward selling part of the crop or using other risk management tools such as futures or options trading, will give any grower some degree of price control. To help, the HGCA makes a range of marketing resources available on its website that are worth exploring.

“Growers also need to be attuned to any contracts are being offered locally.   This year, some have been available with a minimum price plus potential uplifts linked to the futures market.   For many years, NFUS has been suggesting contracts of this type but growers need to understand both the benefits and costs.

“Looking further ahead, now is the time for some long term agreements in our pricing relationship with the maltsters and distillers involved in Scotland’s hugely important drinks industry.  A price for malting barley or distilling wheat that covers the costs of production now would be welcome.   In the coming season, contract prices will need to cover the inevitable rise in costs that will be forced on us from fertiliser, fuel and pesticide companies all too eager to profit from the unexpected rise in price of cereals.”

Notes to editors

Ends

Contact Bob Carruth on 0131 472 4006

Date Published:

News Article No.: 117/10


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