One of Britain's biggest farming companies is so convinced it
pays to leave grain marketing to the professionals, it has renewed
an agreement with a co-op to do just that.
Velcourt has reappointed Centaur Grain as sole seller of most of
its 235,000t of combinable crops for a further three years.
The decision, said Velcourt farms director, Brian Redrup,
reflected the success of the project over the past six seasons.
The agreement offered a transparent, dedicated marketing arm for
Velcourt, allowing the firm to make the most of crops sold, while
minimising risk, he added.
"As intervention support fell away in the late 1990s, it became
clear how global market forces, and the ensuing volatility, would
influence the price of UK grain.
Velcourt needed a dedicated, professional approach to grain
marketing.
"There was a choice between selling to grain merchants, which
have shareholders to keep satisfied, or working with a grain
co-operative," Mr Redrup said.
Centaur Grain, which markets over 1.7m tonnes of combinable
crops a year, handles Velcourt's output through its subsidiary,
Combined Arable Services.
"Velcourt's executive management meets Centaur regularly to
determine the strategy for marketing combinable crops.
The objective is to maximise the value of commodities while
taking a responsible attitude to managing risk," Mr Redrup
said.
Good communication was central to the success of the venture, he
said.
"As soon as budgets are prepared, every Velcourt manager will
brief Centaur staff on the varieties planted and forecasted yields,
so we can try to balance what each farm can grow with appropriate
market outlets."
Matching farmer and co-op needs helped add value to both
operations, said Richard Jenner, Centaur's marketing manager.
"We know exactly how much of what crop is on which farm and its
quality, helping to keep rejection rates and deductions as low as
possible.
We can maximise returns for our client.
"We are clear what Velcourt's budgetary aspirations are.
Knowing the break-even boundary, we can start to build a
marketing plan based on where we judge the market to be
heading."
In return, the co-op receives a flat-rate commission for every
tonne of Velcourt grain sold.
Bespoke computer software allows Centaur to run a "virtual
warehouse" of Velcourt grain.
"A dedicated haulage manager allows us to empty Velcourt farms
entirely, rather than having lorries visiting stores again and
again," Mr Jenner said.
To manage the risk of market volatility, fixed-price contracts
are sought where possible, such as a milling wheat deal with
Warburtons and other agreements for pulses.
"But we often use futures contracts as a hedge and options where
appropriate."
The contract put crop marketing in the hands of professionals,
but the relationship meant it was almost an extension of the farm
office, said Mr Redrup.
"This allows our farm managers, as growers, to concentrate on
what they do best."
ian.ashbridge@rbi.co.uk