Great blog from barley weasel on just this ... moan about Merchants... and then they are gone ... and all that's left are the big 3 who don't care a damn about us farmers, what price nor when we get paid!!
I'm not sure I'd say my current merchants don't care. I deal with one rep who is very conscientious and is a valued part of my business.Great blog from barley weasel on just this ... moan about Merchants... and then they are gone ... and all that's left are the big 3 who don't care a damn about us farmers, what price nor when we get paid!!
I'm not sure I'd say my current merchants don't care. I deal with one rep who is very conscientious and is a valued part of my business.
My family and I choose our marketing partners very carefully as we need financial security. But there will never be just the big 3, the smaller merchants will always be around in one capacity or another as not every marketeer wants to deal with a bigger corporate compamy
There are businesses out there that are finding things difficult, Openfield have reported a £3.3 million loss, Fengrain have posted a loss, no doubt others will too?
As @crazy_bull said skinny margins are the nature of the business and not everyone can support this.
Forward selling malting barley cargos was a good way to loose money this year, some need to sell some boats to facilitate quick movement at harvest, then low and behold a poor harvest here and no good barley to fill the boats so have to buy out of the contracts.I have no knowledge of running a grain merchants, but how on earth can a company (and in Openfield's case producer owned) lose £3.3 million, are they not just buying grain from farm and transferring it to an end user, less the cost of doing so?
In that model, apart from the risk of a customer going bust, where is the opportunity to make a loss?
You would think so! If they are doing 3 million tonnes of grain surely they should be making money???? Accompanied with seed sales for the Warburtons contract, and other buyback contracts offered seed, haulage, storage and drying charges the money should be rolling in!I have no knowledge of running a grain merchants, but how on earth can a company (and in Openfield's case producer owned) lose £3.3 million, are they not just buying grain from farm and transferring it to an end user, less the cost of doing so?
In that model, apart from the risk of a customer going bust, where is the opportunity to make a loss?
I have no knowledge of running a grain merchants, but how on earth can a company (and in Openfield's case producer owned) lose £3.3 million, are they not just buying grain from farm and transferring it to an end user, less the cost of doing so?
In that model, apart from the risk of a customer going bust, where is the opportunity to make a loss?
Yup, so easy, you buy it, sell it, make your margin.
Oh wait, the farmer wants to sell today because the price is high, but the miller doesnt want to buy. sh!t. And then someone else is bidding £2/t more on farm, and so you try and match it because otherwise the farmer wont sell to you and will sell to your competitor. sh!t. So you buy it but now the price has gone down, the miller wants to buy and the farmer wont sell. sh!t. Then you go out on farm with a min £20 G1 contract, but come harvest and beyond, the premium is only £9 and because you've taken the risk, you're left with the bill or trying to trade round it. sh!t. When the market wont give you an upfront margin, you need to take a risk and run a position, but then currency turns round and the market moves away from you. sh!t.
Cargill, ADM, etc have all lost money over the last few years and have rushed to diversity into higher margin business to generate profit. Bunge, one of the big 4 international traders, is up for sale. Wellgrain went bust, Dalmark have pulled out. Invivo sacked 20 of their traders 18 months ago. Glencore UK have made 2 of theirs redundant recently.
Yup, oh so easy to make money.... bit like farming, it grows out the fudgeing ground.....
It's mainly down to the end user I,e the mills not paying what the market needs. So the traders should tell them it doesn't stack up.
This is the whole problem with industry every one wants something for the lowest price possible, heavens forbid any one wants to make a profit (dirty word)