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Discussion in 'Cropping' started by warksfarmer, Jul 21, 2018.
For us mere peasants it’s the same as the difference between dinner and lunch
What does the farmer gain from having one company do their marketing?
Its surely a lovely gig to get for a grain trader to have exclusive deal?
That company has a selling point - lots of grain with a careful control of specification. Making a premium out of it is the hard bit & looks like Angus failed to do so. Merchant Bloggs can buy from several farmers & hopes that they all send in stuff that meets the spec. The CS needs to add enough value to cover their costs and that of the marketing agent.
I know Bruce, he's a fine lad.
Did our agronomy when he started out. Dad went to his wedding.
It's a small world.
There is no way that they can gain enough selling malting barley (in Scotland) to cover the excessive costs. They are basically selling to a cartel. The ex farm price is set by the big buyers- just read the malting barley price threads.
Openfield sent out a letter to their members yesterday confirming that they had bought the AC site. Don't know what they will fill it with because I can't see many farmers in this area rushing to deal with them.
On any given day the price of group 1 milling will be the same for me as a CS because group 1 is group 1 so I got get this increasing value bit. If I’ve got feed wheat then it’s feed wheat not milling.
The price difference will be down to location which is something none of us can control.
And you are paid on what you deliver to a CS so how do I get my feed wheat valued as milling wheat please?
What have openfield actually done wrong? they put in an offer to keep the farmers their space but was rejected, so they waited for the receiver to sell it to them, I presume any of the farmers could have bought the whole lot off the receiver?
Send in 30 lorries of wheat to your CS. Not all are milling spec, some are over group 1 milling spec and some are only feed. Have you ever sampled from different parts of the field? Yield maps are variable enough - so is the quality. The store segregates the loads according to quality with several grades kept separately. Some of the borderline stuff is cleaned up so it makes milling grade (perhaps not Gp1) and the cleanings go in with the better feed spec without diluting that below 72 kg/hl 15% moisture. The grain that exceeds the milling spec is blended with the stuff just under the threshold. Any excess value is paid to members as a rebate or retained for store upgrades & development. You sincerely hope that the extra cost of the CS space is made up by achieving the higher spec.
Stick 30 lorries in your own shed. If it is blended evenly, you might make a low grade milling at best. If it is variable, you try a few loads successfully then you get the next 3 back with rejections and the extra haulage charges which dilutes your premium and gives you some hassle in finding something to replace it or pay out the default so you can fulfil the terms of your contracts. If it's all Group 1 spec, pat yourself on the back and be pleased that you've done a good job with low storage costs.
Put quality in a big heap with crap and you'll end up with the lower common denominator. Send 30 loads to Clive via Frontier/Glencore/whoever and pay less than your local CS for storing it. You get what price you agreed but if it's over spec the shareholders of the merchant get the benefit. Clive's store isn't open for deliveries 18 hours/day & he doesn't have 3 driers to take in several batches of different grades or crops each day.
Your shed sounds good value. Now put another new one up for £80/t for another block of land you've got for a 3 year CFA. You might have the land for longer but you've got to tender for it again in 3 years. Can you justify that or do it for £80/t? I doubt it. There is little alternative use for the shed if you lose the extra land after 3 years apart from storing caravans and you'll need planning permission to change the use.
Miss sold the project to start with.
'Marketed' barley very badly.
The 'offer' to save AC needed members to continue guaranteeing to supply grain, paying annual charges for no benefit other than quick movement.
The members rightly took the decision the 'Your first loss is your best loss'
As I understand it Openfield is a co-op -if I was a happy Openfield member I would be asking why they have bought in.
As was explained to me by a MD of a major grain trading business that don't deal in Scotland - "your market is a bit different".
Openfield have tried and failed with a captive supply why should it be any different after they have invested English members money to have another shot at the Scottish market.
As @KennyO said the malting barley job is to 2 or 3 homes that have existing suppliers and are unlikely to change unless it is for price. Wheat used to be imported to Scotland but since some big pig and chicken homes have gone we are probably nearer parity. It is small market - Ensus (when operational) consumes more than Scotland produces.
This is like the tyre weight ratio thread going round in circles ( interesting though )
But could you resell the CS space after 3 years? I want to hear from a member who actually has done and at what profit.
Does anyone remember ucos (united cereals of Scotland)?
Another great plan to grab an extra £. Problems I recall were.
1) they were to greedy to quick, trying to justify there purpose.
2) the big buyers (diageo, etc) thought stuff this ever happening. We need to call the shots. So they refused to buy anything from them and import instead. Didn't matter how much it cost them, as long as they broke ucos.
Which they did with great success.
Central storage to make best use of quality works, central storage to extract a few extra ££ does not.
So Openfield sold the space, not AC?
I put wheat in a long pool with UCoS and it was mostly sold pre harvest - price rose through the year and I loaded it at £20 below market. I have since marketed my cereals myself. I know markets are volatile but I had made my own sales early in the season expecting the pool to reflect the delivery period.
Openfield and there staff were behind the project from the start. They sold the idea. Money was paid to AC. Openfield staff originally managed the project and site.
Malting barley is near enough a monopoly, so the big buyers will spend whatever it takes to break a farmer co op.
The only solution is PGI status for scotch whisky/scottish malting barley, to stop cheap imports screwing us down.
Scotch Barley could be valued at £350/t and it wouldnt make a jot of difference to the whisky industry.
Ironically this year worldwide weather(mostly drought conditions) has taken control of this market from the big buyers especially with a one in 38000 year drought in Scandinavia. Normally buyers here have Danish barley to import if the price seems high or quality poor here. This year they are having to use any Scottish barley they can find and the goalposts on quality have moved quite a bit.
We did. Bought in at £85/t and sold at £115. Not always the case. Camgrain couldn’t sell their new capacity fast enough when they expanded a few years ago and Frontier bought in. You can rent space in some CS stores. I was quoted £18/t to lease & declined it as I could sell at harvest and take a paper position for less. It was for dry oilseed rape which is a bland commodity with little opportunity to add any value so I opted for £8-9/t for a merchant store instead.
Yes, but the price hasnt.
With the canadian problems, danish drought, etc the sky could have been the limit this yr, but with farmers prepared to deliver unpriced, we are screwed