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Farming Matters: 'Every tonne you lose feels like a death by a thousand cuts'

It was announced recently that one of the UK’s oldest grain merchants, Isaac Poad, was to go into administration, writes Phil Garnham.

Created in 1863, it is based near York and a known name in the north of England.

 

Sadly, this sort of thing is going to be a more common occurrence as we move forward in the next five years.

 

Since 2017, we have seen the demise of Wellgrain, Dalmark choosing to withdraw from the market, Fengrain’s merger with Frontier Agriculture and the consolidation of the ADM and Gleadell businesses.

 

Not forgetting that, in the same timeframe, Openfield announced large losses and the following year announced slim profits.

 

Redundancies have been made in firms that some would have thought were safe, as it appears the industry is becoming aware of the bloatedness at higher levels.

 

Big salaries now need to pay for their seat instead of coasting to a retirement pay-off.

 

Inertia

 

The feeling has been for some time that something needs to happen in the trade, not just because of the inertia in the markets, but any industry where there can be eight people calling or texting the same accounts day in, day out, has an issue.

 

And that issue is profit.

 

I was once told by a senior trading manager that the most powerful word in the English language is ‘no’.

 

And it appears it is a word some have forgotten to use.


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In a bid to buy in short positions, compete on-farm or just to be ‘busy’, the prices for feed wheat on any given day can vary £3/tonne to £5/t from one merchant to another.

 

Of course, the farmer doesn’t care. In terms of marketing, they can sit there and play one off against the other, sell a bit off the combine and let everyone else chase after you.

 

Certainly, with the likes of Cefetra and the rejuvenation of Glencore Agriculture, the market has suddenly felt awash with merchants, which has forced them into new territories in a bid to maintain volumes and status. It reeks of desperation, because it is.

 

Payment

 

Look back at WellGrain; it played a lively game. Everyone wanted the £2/t more and was prepared to wait a couple of weeks more for the payment, and look what happened.

 

If you think your grain merchant is making £5, £3 or £2 a tonne when they buy and sell your produce, think again.

 

And I don’t write that so people should pity their merchant. God knows I’ve worked for most of them.

 

I say it to make people aware. There are firms out there, good firms which employ excellent people who, believe it or not, care about their customer base. But they have limitations.

 

They cannot pay the £1.50/t when someone else can and every tonne you lose feels like a death by a thousand cuts, because you still have to make your target tonnage.

 

And I apportion no blame at anyone’s door. It is supply and demand and it will carry on until one day it doesn’t.

 

Then, in time, there will not be eight people phoning you anymore. There could be three; all paying the same price; all offering payment in 60 days; and not caring if they buy it or not.

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