Fixing exchange rate makes sense
The farmers who a few months ago fixed their exchange rate for their SFP at £0.90:€1.00 have done a good little bit of business. The last 2 years have shown there is real value in fixing when the rate looks rather than waiting for the 30th September lottery.
But what is a good rate and should farmers become currency traders?
What is a good rate? Well....is it right for you is a start. Most business will produce an annual budget and know what they ‘need’ their SFP to be. Also what is the outlook in the economy? The last two years there has been huge uncertainty in the economy...so was the upside of fixing more luck than judgement?
I think the answer is yes and no. People who did lock in felt that £0.90 was good enough for them. Once you lock in you need to stop watching the rate.
My tips would be know what you want, see what the rate looks like, take advice and then make a decision. Farmers would not start a new enterprise without some research and talking to a lot of people. Treat fixing rates in the same way...do your research.
Looking ahead to next year...who will think about fixing?