How a hands-on strategy
Marketing strategies to
squeeze the most from
carefully tended crops are
the focus for this weeks
round up of baromemter
Andrew Swallow and
Andrew Blake report
OPTIONS, pools, funds and futures are all shunned by Northern Ireland barometer farmer Michael Kane, who prefers close direct contact with local end-users because he believes such a policy has proved itself.
"It has worked well for us in the past," he says. "The only mistake we have made was selling rapeseed at harvest last year, when it went up afterwards."
Wheat was kept back until November when a ring round the feed mills found increasing demand. Over a two week period all 900t was sold for an average £92/t. "The price didnt move up any more, and dropped from March onwards," he notes.
Merchants are cut out of the marketing process. "We prefer to deal direct. It cuts out a layer of communication making it easier to deal with any problems. Also, if we have good quality wheat, the buyers know exactly where it is coming from. A merchant only contacts us when it is in his interest to."
Mondays and Fridays are avoided for selling because buyers are reluctant to bid, he notes. Up to eight mill buyers are contacted on a weekly basis. "We build quite a good picture of whats happening by phoning round the mills. We feel that to keep this information coming we do have to do some business, sometime, with each."
That also spreads the credit risk. "We are dealing mostly with old family firms. We trust their credit at present, but we may have to look at this more closely in future. If a payment runs late we are on the phone very quickly."
Payment terms are part of the negotiation. That can mean payment as soon as collected, or up to 28 days later in some cases.
Sales are usually made on a spot basis, especially around Christmas when demand is strong. "We are dealing with a number of smaller mills. Secure deliveries are important to them and we will load when the mill needs it."
This season only the barley has moved so far, for feed and seed. Oilseed rape is in store, hopefully to go to a Belfast mill for compound use. If not, haulage to Liverpool means a lower ex-farm price.
"The mill needs to be able to buy 1000t for it to be worth their using the rape. They know what weve got here, so when they are buying we shall sell. So long as the price is right."
• Weekly contact with mills.
• Cut out middle man.
• Seed sold at harvest sorts cashflow.
• Spot sales preferred.
Michael Kane applied to join the Northern Ireland Farm Quality Assured Cereals Scheme this summer and had a preliminary inspection last month. Field record requirements are no problem, but building modifications will cost £2000 plus labour.
Mr Kane favours the scheme in principal, but has reservations. "I agree with the whole concept, but grain coming in through the docks must be assured too. And compounders must apply the same standards as are imposed on farm."
In dealings with feed mills and many were buying un-assured grain from the south of Ireland anyway," he notes.
Abbot wheat and conservation grade oats mean assurance will be required for next harvests produce. Whether the scheme is worthwhile overall will depend on how strictly it is enforced, he believes.
Annual subscription to NIFQACS is about £45/year.
• Scotland: With limited storage Eric Haggart tends to sell forward at a negotiated price for a set delivery month. Half his 1998 harvest was accounted for in February and March mainly through two large firms. He is wary of putting too much in any one direction after all his spring malting barley went to another two years ago for a price to be agreed after harvest. Mr Haggart maintains the company missed a chance to sell as well as it should leaving him £2000 worse off. "I could have done better myself and we settled out of court. If mistakes are going to be made I would rather make them myself." Spring rape, still uncut on Tuesday, will be sold spot. "But if the price isnt good enough I may look to a merchant to store it."
• South: Patrick Godwin still does all his own marketing using an on-line service to identify trends and by telephoning round merchants. "I feel I can do it as well as others at the moment. If we had a larger tonnage I would probably look to a co-op. For now I have got time to do the job and enjoy it." This year plenty of wheat was sold forward in April, May and June at reasonable prices. "We got £74/t for Consort in October." He also took advantage of a weather price hiccup in September leaving just 100t on the farm.
• North: Despite co-op enticements to take part in pooling Keith Snowball prefers to market his own produce. "As far as I am concerned it is part of the fun of the job. We always market our grain through from harvest to May to spread the risk." Faxes from merchants are one source of information, and the HGCAs recently launched Saturday bulletin looks useful, he says. "At the moment there is a bit of farm to farm trade for barley which we can load out at any time. Oats can be quite fun to market if you have got samples that attract racing stables." Well-known smaller outlets are favoured. "Strugg-ling for the last 50p/t from an unknown merchant is asking for trouble."
• East: With four years experience as a grain trader with a large merchant David Pettitt believes he is well placed to do his own marketing. "I tend to pool the oilseed rape because we need to move it at harvest and spot prices can be poor." Good links with three main firms keep him abreast of developments, he maintains. "The key thing is not to over-expose yourself by selling everything in the same movement period." Dealing with bigger companies lessens risks and avoids the need for separate insurance, he adds.
• West: All Steven Mackintoshs wheat is used by the farms poultry enterprise, a big advantage being that it accepts grain at 16% moisture. All other crops, bar barley sold at harvest, are grown on contract except for sugar beet, onions and potatoes. The latter two are sold through Ross-based Camber Produce whose specialist knowledge offers better returns than the open market, he says.
• Midlands: Basic grain selling philosophy for Steven McKendrick ensures sales are made at the same time, roughly every six months, as the farms pig feed orders are placed. "That way we are buying and selling on the same market."