Reducing business risk

Leamington arable farmer Rob Fox now has a stronger grain marketing strategy, thanks to AHDB’s Monitor Farm programme.

Rob has hosted AHDB Monitor Farm meetings at Squab Hall since June 2014.

Two years ago he made a commitment to review his marketing strategy and developing a lower-risk approach.

The difference between Rob’s worst and best years was £300,000, due to both yield and selling price.

At a grain marketing Monitor Farm meeting in 2015 Rob said: “My current marketing strategy is very high risk. During the last four years we had two of our best and worst years, so we have been nervous about selling forward. However with our benchmarking activity and use of AHDB Cereals & Oilseeds’ CropBench+ [now Farmbench]programme, we have a strong grasp on our costs of production at least.

“We know we need to try and lower our risk, as it is either sold forward very late, or at harvest or beyond. I need to start looking at the markets earlier and then perhaps forward selling some of the crop.”

Rob has since kept his word to lower his risk.

He said: “The Monitor Farm meetings really opened our eyes to what we were currently doing with our grain marketing. We were quite a high risk spot-seller which had worked very well in some years and not so well in others. Sometimes we could take advantage of high spot prices, but we became forced sellers in periods of low prices.

“So we’ve reviewed and quite dramatically changed what we do with our grain marketing now. We’re already seeing the benefit from that, now that we have a much lower-risk strategy.”

Rob now forward sells 20 to 30 per cent of his crop and uses market insight reports to inform his selling decisions.

“We have the storage so we can sell nearly a year ahead. This May and June we’ve been selling ahead for April and May movement in 2018.”

Jack Watts, AHDB lead analyst, said: “Price and broader financial risk management are now an essential part of successful farm business management. For an individual business, the most appropriate marketing strategy depends on the underlying business objectives. For those wanting to create as much consistency as possible in profitability, marketing grain over a longer period of time helps smooth out peaks and troughs over time.”

Daily market prices, intelligence and analysis are available from AHDB at cereals.ahdb.org.uk/markets

The bare minimum increase Rob wants to achieve in crop sales is £3,000 – £5,000 per year. He hopes to achieve this through more informed selling.

Rob added: “Obviously we’d like to achieve a lot more than this!”

Monitor Farms and Farm Excellence Platform

AHDB Monitor Farms bring together groups of like-minded farmers who wish to improve their businesses by sharing performance information and best practice around a nationwide network of host farms. AHDB organises and facilitates Monitor Farm meetings for farmers, who own and operate the scheme – by farmers, for farmers. Monitor Farms are part of the AHDB Farm Excellence Platform. The Farm Excellence Platform inspires industry to improve performance and succeed through farmer-to-farmer knowledge exchange.

Monitor Farm benchmarking groups use Farmbench – AHDB’s new whole-farm benchmarking tool. Farmbench allows producers to input either whole farm or enterprise specific data to suit their needs. Costs can be split across beef, sheep, potato and arable enterprises, with dairy coming online in 2018. Farmbench is designed to help farmers understand and compare full costs of production at both enterprise and whole-farm level. For more information, visit farmbench.org.uk.

To find your nearest Monitor Farm visit cereals.ahdb.org.uk/monitorfarms. For more information on your AHDB Farm Excellence Platform contact your local knowledge exchange manager.

 

 

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About The Author

John Swire - Deputy editor of Agronomist and Arable Farmer as well as responsibility for the Agronomist and Arable Farmer and Farm Business websites. After 17 years milking cows on the family farm John started writing about agriculture in 1998 and has since written for a variety of publications and has developed a wide circle of contacts within the industry. When not working John is a season ticket holder at Stoke City and also of late has become a fitness freak, listing cycling, swimming and walking as his exercises of choice.