Pools spread the risk and cut the hassle

12 May 2000




Pools spread the risk and cut the hassle

Spreading risk and removing

market hassle while

achieving good prices are

the main selling points for

merchants marketing

schemes. Suzie Horne and

Robert Harris see how two

have performed

BANKS Agricultures grain pool tonnage has grown to well over 600,000t since the company first launched the scheme eight years ago.

While half of its trade is in free market grain, pools now run a close second, accounting for 40%.

For many growers, time, interest and marketing skills can be a problem. Handing over marketing leaves them free to concentrate on producing a good crop.

Tonnes or area can be committed annually to the Banks pools, which offer four movement periods (see box), payment 28 days after the pool movement period and quality and location bonuses for an individuals grain, oilseeds or pulses.

Banks claims that returns to growers significantly exceed Home-Grown Cereals Authority average prices. For those who want extra security, options can also be used.

The most recent results – for the Jan-Mar feed wheat pool – show an average price of £72.60/t was paid to growers after commission charges. Values ranged from £70.06/t, for standard feed wheat some distance from consumers, to £76.33/t, for biscuit wheats grown close to millers.

But grain director Richard, Whitlock says growers have incurred unnecessary extra costs this year because of problems related to poor storage, like high moisture contents and infestation, as well as simple mistakes such as loading the wrong variety. "Costs such as these are both avoidable and unaffordable both for farmers and ourselves," says Mr Whitlock.

Unlike many growers selling their own grain, he has already sold one-third of his new-crop wheat pool tonnage, believing that new crop is still overvalued, given the rising £, the implications of Agenda 2000 and the likely size of the UK wheat crop this year.

In comparing pool performance against the open market in the graph, the open market prices referred to are weighted averages paid by Banks. These are both spot and forward values in movement periods equating to those in the pool. Prices have also been adjusted to account for tonnage and location.

Growers should choose their merchant with care, says Mr Whitlock. As well as checking financial status, growers considering joining or changing pools should ask what the net average return, for a standard grade of the commodity in question over the past three years in his region, has been.

"The take-home price, payment date and quality criteria for a specific location are important. The grower must set the criteria so he can fairly and reasonably compare like with like, and he should challenge the merchant to prove it."

BANKSPOOLS

&#8226 Minimum contract – 100t for cereals, 25t for oilseeds and pulses.

&#8226 Four movement periods – Harvest/Sept, Oct/Dec, Jan/Mar, Apr/June.

&#8226 Marketing charge £2.50/t for cereals, 2.5% for oilseed rape.

&#8226 40% of trade.

Not top money, but not bottom either

Roger Barnes, who farms in partnership with his father at Pierrepont Farm, Terrington St Clement, Norfolk, is putting all his wheat into the Banks pool for the third year running.

"We are very happy with it. Although it is not top money, you can be assured it is not bottom money either," said Mr Barnes. "I have not got time to turn my attention to marketing. This way I know when exactly the wheat will be paid for at about average price, provided I have got my job right."

Like many growers, Ian Symington of Balaclava Farm, West Winch, near Kings Lynn, feels it is unlikely that he would be able to catch the top of the market.

Having started four or five years ago with 20% of his wheat and oilseed rape in the Banks pool, he now commits the whole of his wheat crop annually – about 3000t.

Growers have incurred unnecessary extra costs this year, says Richard Whitlock.


See more