‘Gamble’ of euro machinery imports

Tony Clowes is a farmer with his finger well and truly on the pulse when it comes to commodity, spray and grain prices.

Farming 80 hectares (200 acres) at Fen Farm, Washbrook, Suffolk, he believes cost of production figures some are quoting do not add up, and euro prices have more to do with wheat price than lack of sales.

“Figures touted around that wheat costs £110 to £115 per tonne to grow just don’t make sense when it is selling for £100 to £105 a tonne - the price is £10 below what it needs to be to make viable sense,” he says.

Mr Clowes owns Quivogne UK, selling equipment via a network of dealers. Formed in 1990, the firm is the sole importer of the French-made Quivogne range of discs, subsoilers and cultivators, and has seen notable success with the Tinemaster disc and tine combination system.

“I ask farmers when I demonstrate a machine what their costs are to grow wheat and many just don’t know - or it’s a rough guess - even with modern combines that can tell you almost exactly how many tonnes have been cut.”

Mr Clowes says sales were down in 2009 due to budgets not being available from last year.

Despite poor machine availability, 2008 was actually a good sales year. Since incomes dropped as wheat prices hovered around £100/tonne, he is now tending to demonstrate one year and sell the next once a purchase is in the budget, rather than demonstrate a machine and leave it on farm, as was once the case.

Sales in 2008 were better than expected but fluctuations in the euro exchange rate meant dealers were constantly asked to call for a price on machines rather than re-issue price lists.

“What many dealers and farmers didn’t and still don’t realise is that we buy machines three to six months ahead when we feel we have the best euro rate, but if the rate then goes up, it is assumed we can do something with the price we paid for the machine.

Fluctuations

“However, as an importer, we can accommodate euro fluctuations more than we can a turbulent grain market,” he says.

Since Mr Clowes began importing Quivogne equipment, the business has dealt in francs and now the euro, but a 50 cent drop in the rate from around 1.6 to 1.08, as it roughly stands today, has been the largest change yet. It led to trimmed margins for Quivogne and its dealers, with prices based on speculation in some cases.

“I see the machinery import trade as a gamble, much like farming is,” says Mr Clowes.

“An importer can gamble on buying 20 machines and sell all of them, but on the flip side he can gamble and it be an awful year due to currency, wheat price or the weather and sell half that number.

This rings true as a farmer too. Growing wheat is taking a gamble in hoping the price is high enough to make a margin, weather is good to do this and machinery isn’t too expensive to buy.

“We gamble on storing or forward selling wheat too, never knowing what is coming next, but always know your costs of production,” he says.

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