23 November 2001
Strike ‘could upset grain market’

By Tom Allen-Stevens

CEREAL growers are being urged not to compromise their grain marketing strategy to free up cash, following the delays over subsidy payments.

A strike at the Rural Payments Agency – responsible for paying subsidies – means that many farmers will not receive their IACS cheques until well into the new year.

This could be too late for many growers, for whom cashflows are already at their lowest ebb ever, especially tenants who owe rent due on 30 September.

The National Farmers Union has been concerned that an influx of cash-strapped farmers on to the grain market would push down prices and overall returns.

Home-Grown Cereals Authority senior economist Gerald Mason confirms that short-term domestic problems can influence the grain market.

“The supply and demand situation for the whole year can be almost irrelevant to what is happening on a particular day,” he told FWi.

Last year, for example, a large crop to export should have kept a lid on prices.

But movement restrictions due to foot-and-mouth limited supply and increased demand, and prices for feed wheat rose.

This year the worry is that the reverse will happen as farmers are forced to sell to cover debts, and may accept low prices from unscrupulous merchants.

Rob Sanderson, grain development manager with Grainfarmers (formerly SCATS) said that competition in the sector made this unlikely.

“There are fewer merchants around who are competing keenly on price and farmers are more open to shop around for a good deal.”

But he has noticed a definite rise in farmers requesting a cash advance on grain pool payments, and attributes this to cashflow worries.

“Id say its important that farmers make sure they manage their cashflow independently of marketing their crop, as you can with pooled schemes.”

He points out that grain markets are firming up, with a 2/t increase in the price of feed wheat this week.

NFU cereals committee chairman Richard Butler advised growers not to be panicked into selling grain, and to be open about the situation with their banks.

“Farmers have to take a view on the markets, weighing up all the factors, but the blame for this situation lies squarely with the Department for Rural Affairs.

“This strike comes on top of all the other decisions taken by the government that have damaged profitability for arable farmers. Its intolerable.”

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