Consider buying in quality grain to fulfil contracts - NFU

THE NFU is advising farmers whose own harvest has not come up to scratch to consider buying in quality grain from other farmers to fulfil their contracts.

NFU combinable crops board chairman Ian Backhouse said, with this year’s harvest drawing to a close, he has already received calls from growers whose grain has just failed to meet the contract specification. In these cases it has been downgraded to feed value with potentially significant losses to the grower.

“However, I believe growers in that position can use the market to their advantage to protect their premiums,” he said. 

“Most sales contracts for grain obligate the grower to deliver grain of a set specification; they do not specify who has to grow that grain. Where a grower’s own grain fails to meet contract specification they can buy in grain from other growers to meet their contract obligations.

“The advantage is that, in the current market where spot prices are significantly below forward contracted prices, the grower can buy in quality grain, sell his own as feed and meet forward contracts collecting the premium.

“We should all remember that when the market rose, growers were all held to contract obligations and for those who fell short on contracts it was an expensive experience.”

The NFU estimates that the national harvest is 80 per cent complete, although there has been regional variation.

Poor weather in the South West, North West and North East has been blamed for affecting quality and quantity of grain. But Mr Backhouse insisted ‘all is not lost’ in these affected regions.

“A season which started to give the impression of shadowing the appalling 2008 experience, with a wet start to barley and oilseeds, turned into one of the better harvests in the East where the majority of the crop is grown. A solid dry spell allowed the combines to roll, grabbing dry wheat in a non-stop run,” he said.

But he said, with good dry corn in stores around the country and quality ‘looking to be good’ across England and Wales, the concern is now the market, which has seen prices fall to below £100 per tonne for wheat.

He said many growers who had sold wheat forward had contracts for milling wheat and malting barley at prices almost double current spot prices. However, with such wide variance in prices growers need to be watchful that they maximise their crops’ potential, he said.

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