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Forward buying cake
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<blockquote data-quote="ollie989898" data-source="post: 8141690" data-attributes="member: 54866"><p>All the raw materials in any cake can be bought ahead of time on contract - I used to get daily emails from all the importers and suppliers and grain etc was only a phone call away. Even the molasses. These are big companies buying in millions of tonnes of stuff and they have a shipping or production schedule extending months into the future- they have to move tonnes because the margins on these commodities is actually tiny so it's all volume based.</p><p></p><p>A company should be able to offer you a fixed price for a known duration between the months of May-Sept and then Oct-Apr 23 and possibly even May-Sept 23 because they will have the exact same price lists I used to have in front of me. They add their haulage cost, their milling cost, their margin and they can work out the finished price.</p><p></p><p>A contract where they can voluntarily alter the formulation or price isn't worth a damn to anyone.</p><p></p><p>In an absolutely ideal world a compounder would have 100% of their volume on contract- it totally reduces the risk to them- it never mattered a jot to me if say wheat was £100 a tonne or £200 a tonne- my margin remained constant. Of course, the farmer had to sign on the line and return the contract and then accept his predicted tonnage, which I then went away and bought on his behalf- you would be a total gambler to not fix the materials on the day the stuff was sold.</p></blockquote><p></p>
[QUOTE="ollie989898, post: 8141690, member: 54866"] All the raw materials in any cake can be bought ahead of time on contract - I used to get daily emails from all the importers and suppliers and grain etc was only a phone call away. Even the molasses. These are big companies buying in millions of tonnes of stuff and they have a shipping or production schedule extending months into the future- they have to move tonnes because the margins on these commodities is actually tiny so it's all volume based. A company should be able to offer you a fixed price for a known duration between the months of May-Sept and then Oct-Apr 23 and possibly even May-Sept 23 because they will have the exact same price lists I used to have in front of me. They add their haulage cost, their milling cost, their margin and they can work out the finished price. A contract where they can voluntarily alter the formulation or price isn't worth a damn to anyone. In an absolutely ideal world a compounder would have 100% of their volume on contract- it totally reduces the risk to them- it never mattered a jot to me if say wheat was £100 a tonne or £200 a tonne- my margin remained constant. Of course, the farmer had to sign on the line and return the contract and then accept his predicted tonnage, which I then went away and bought on his behalf- you would be a total gambler to not fix the materials on the day the stuff was sold. [/QUOTE]
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Forward buying cake
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