30 June 2000

Scots carry on

as before despite 1999 disputes

DESPITE last harvests price disputes between growers, maltsters and merchants, it seems little change to traditional marketing methods will be made in Scotland this year.

"Last year was unfortunate," says John Hunter, general manager of East of Scotland Farmers.

"We had a bad autumn in 1998, resulting in a much lower acreage of winter wheat being planted. So more barley than normal was planted the following spring and, right across the country, it turned out to be of exceptional distilling quality.

"Its a finite market and it was obvious at the start of harvest that the quality was good. What happened was that there was the classic over-supply situation, and the price came down."

But there is little indication that more of Scotlands farmers are going to sell their grain through co-ops this year and there is no pressure for the co-operative to increase its 38,000t capacity, he says.

Simon Barry, chief executive of Highland Grain, echoes that.

"Selling through a co-op gives considerable protection and security. But there is a capital requirement to join a co-op and I suspect that, after three poor years, that money for many just isnt there."

In a bid to try to achieve economies of scale and improve returns to members, Highland Grain, handling 30,000 t of mainly malting barley for the groups 76 active members, has been involved for the past few years in joint marketing with other grain co-ops on malting and feed barley, feed wheat and oilseed rape.

The informal arrangement involves EoSF, North Eastern Farmers, Aberdeen Grain and Highland Grain, but Mr Barry does not anticipate it being formalised in terms of co-op mergers.

"It allows us scale while at the same time allowing us to pay very close attention to our own members in our own localities. I believe that members need and want to know that they have a local contact," he says.

Douglas Morrison, chairman of the Scottish NFU combinable crops committee, says that the union has held meetings with the maltsters, distillers, co-ops and merchants and that everyone accepts that last years market was unsatisfactory for all involved.

Sterlings strength against the Euro made exporting tough for maltsters and there was an international contraction in the spirits market. But the main problem affecting the malting barley price was over-supply, he admits.

"What happens this year remains to be seen. It all depends on the quality. Some growers are saying theyve had too much rain, and we are all in desperate need now of some sunshine.

"Although we are not going to see any additional demand from the distillers this year, if we get a more normal mix of crop then we will be able to export the high N barley for lager."

There is little prospect of farmers storing malting barley themselves in a bid to improve returns, he adds.

"The drying and storage is critical, and maltsters prefer to do it themselves or use co-ops or grain stores. They want the grain under their control as quickly as possible once its harvested."

That argument stopped many growers going for grants to put up storage in the late 1970s and early 1980s. "Now, there just isnt the money out there for farmers to consider installing their own drying and storage facilities," he says.

Mr Morrison urges growers to make absolutely sure that they fully understand any grain contracts they sign.

"That was one of the big problems last year. Farmers were not always aware of exactly what the contracts meant. If a contract says average price then growers need to be absolutely clear what average means. Too often, that doesnt happen."

Peter Logie, the Scottish NFUs commodities manager, agrees that much of the trouble last year was not due to contracts being broken but because growers failed to study the details of the contract closely enough.

"If youve contracted to sell for an average price for, say, September and you deliver grain on September 1, you wont be paid until October, until the whole of Septembers prices are averaged," he says. "Read and understand the details before you sign."

"And we would also advise growers to do their own testing so that they know the quality."

of the grain before it leaves the farm. If there are any problems later with payment, you cannot argue your case if you have no evidence of quality."

SCOTS BARLEY

&#8226 No increase in on-farm storage.

* Growers hoping for better.

* "Know your contract" advice.

* Test grain before movement off farm.

Rock and a hard place?

SAC agri-business economist Neil Fraser believes there is unlikely to be any large-scale investment in grain storage in Scotland in the near future. "There has been little return from storage in the past few years and people question if theres any point," he says. Scottish growers, even those working together in co-operatives, have insufficient scale to wield any real clout in the marketplace, he believes. "The hard fact is that there is just too much cereal around and, at the end of the day, imports are no problem. The buyers have plenty of other places where they can buy grain."

Rock and a hard place?

SAC agri-business economist Neil Fraser believes there is unlikely to be any large-scale investment in grain storage in Scotland in the near future. "There has been little return from storage in the past few years and people question if theres any point," he says. Scottish growers, even those working together in co-operatives, have insufficient scale to wield any real clout in the marketplace, he believes. "The hard fact is that there is just too much cereal around and, at the end of the day, imports are no problem. The buyers have plenty of other places where they can buy grain."

SCOTS BARLEY

&#8226 No increase in on-farm storage.

&#8226 Growers hoping for better.

&#8226 "Know your contract" advice.

&#8226 Test grain before movement off farm.