24 May 2002

Cool reception for NFU

grain contract model

By Tom Allen-Stevens

A NEW model for grain contracts which the NFU hopes will win significant changes to the way grain is sold, has met opposition from the trade.

On launching the contract, NFU cereals committee chairman Richard Butler said that the aim was for it to be a "catalyst for change" in the way farmers traded grain.

Designed as an alternative to the current UK Agricultural Supply Trade Associations contract, it will offer growers greater flexibility and allow them to realise the underlying value of their grain, he said.

"Weve tried extremely hard to work with the existing contract, but always been frustrated," he said. "So we are working with existing partners and the trade and have come to a new contract."

One of the key changes is that growers will have a right to receive an analysis of every load of grain they sell. But this provoked a hostile response from the grain trade.

"If you make it a requirement youll increase the cost and the market cannot afford that," said UKASTA chief executive Jim Reed. "This applies to a number of features of the NFU approach which will only add bureaucracy and complication."

The NFU is pinning its hopes on high uptake of the contract by farmer co-operatives. But Tim Pollock managing director of traders Grainfarmers said the farmer-owned company is unable to use it as it stands. "We would instantly be in breach of contract because most mills do not send back an analysis of every load."

Feedback

Alex Waugh, of millers group NABIM, said growers could only expect feedback if the grain delivered did not meet the specification of the contract. "Thats the way the food business works and I dont expect our members will change."

Millers are also sceptical about an option in the contract to pay growers a premium for grain delivered above specification. "Were looking for consistency," said Peter Jones wheat director of the UKs biggest miller Rank Hovis. "Just because its better quality doesnt mean its better for us."

There were also concerns that the grain trade would seek to offset the extra cost of paying a higher premium for quality wheat by offering a lower base price.

The trade is also "uncomfortable" with stipulations over analytical tolerances. No grower trading under the new contract would be penalised if the specification of the grain failed by less than the tolerance of the machine used to measure it.

However, Mr Reed confirmed that some aspects of the NFU contract were likely to be incorporated into the UKASTA contract. Mr Pollock added: "Well take the best bits of the NFU contract and stick them in as special conditions of the UKASTA contract." &#42