Scottish growers urged to consider forward contracts

Scottish growers are being urged to consider signing forward contracts for grain next year, despite the difference between contract and spot prices this season.

Speaking at SAC’s Outlook Conference, Julian Bell, SAC rural business consultant, acknowledged many farmers felt let down having signed malting barley contracts at £120/t to miss out on spot prices of £200/t after harvest.

“Contract prices were good at the time of signing and no-one foresaw the market rising to where it did,” he said.

Encouraging production

“The crucial thing is that farmers don’t take the view that they are not signing contracts.

“Forward contract prices are £50/t higher for next year at £170-£190/t for malting barley with the malting industry very keen to encourage production and putting its money where its mouth is.”

And he urged caution against getting too carried away with high prices, pointing out that in real terms prices have been much higher in the past.

World grain production high

“Even in the 1990s, £140/t for wheat was worth more than £180/t for wheat today in terms of the costs growers have to pay,” he said.

The scenario for oilseed rape prices was similar, he added.

World grain production was at a record high this year with the wheat crop up 10 million tonnes on last year at just over 600mt. Coarse grain, such as rye and maize, was up a record 74m tonnes.

Higher demand

“World grain demand is up 44m tonnes in one year and we are gaining on average 30m tonnes of demand on the feed grain market because of better prosperity, more meat products and biofuels, particularly in the USA, stoking demand,” Mr Bell said.

In the UK the wheat crop was 1.5m tonnes lower than it should have been because of lower yields.

Return to SAC conference special report