The other day somebody said to me that “high prices weren’t any use to anybody”, and I could see what made him say this. Nobody predicted this price spike and certainly everybody has been surprised by the speed and the levels to which prices have risen.
One thing I am finding is that growers still have bitter memories of the 2007/08 price spike when prices crashed back as quickly as they had risen, despite analysts saying at the time we could look forward to five years of continued high prices. This time growers have been busy locking into firm prices for some of their 2011 and 2012 harvests. While levels for these are £30/t below spot prices today, it still seems worth managing the risk by using options and minimum price contracts.
I also took the decision last week to cover ourselves 100% for all NPK and S fertilisers for the 2010-11 season. Prices were literally rising by the hour, the mobile had become literally too hot to handle with incoming calls and texts from traders withdrawing and making new offers.
Making decisions for livestock has been even more difficult. With grain prices, you can manage risk to some extent by selling forward and using options for each harvest, but this is not so easy with livestock. Replacement ewe prices are at record levels and when you buy, you are making an investment for the breeding life of the sheep, and who can guess where lamb prices will be in four to five years’ time.
Coupled with all the above, I am in the midst of a three-year rent review which will take me beyond the single farm payment. I had a welcome call this afternoon away from the world of agricultural commodities, and that was a summons to don boots on this Saturday, marking the commencement of season 27 for Cambridge.