Farmers Turn To Grain Marketing 'Pools' To Combat Commodity Price Volatility
Greatly-increased levels of volatility in global commodity prices are encouraging more farmers to consider 'pools' as part of their overall marketing strategy according to the Atlas Fram Group, the UK's leading farmer-owned farm inputs purchasing and grain marketing business."Timing farm input purchases and output sales has become increasingly critical under current market conditions.
Having access to top-quality information, the ability to interpret data and the expertise to devise a coherent marketing strategy are essential," emphasises Barry Howard, Crop Marketing Manager for Atlas Fram, which recently formed a marketing alliance with ADM Direct. Mr Howard adds:"Volatile markets provide farmers with the potential to achieve greater rewards, but also make it essential to manage financial risk effectively. The price which they achieve for crops can have a greater impact on overall returns than yield, which is traditionally the focus of their attention.
Top-performing farm businesses not only produce higher-than-average yields and have lower-than-average fixed and variable costs per tonne, but also place much more emphasises on marketing. Consequently professional farmers who are looking to achieve amore structured approach to the marketing of their combinable crops are increasing their use of pools."This is understandable because the current commodity price volatility which weare seeing is making it harder for farmers to know when the best time to sellis, even those who follow the markets very closely. In an environment where market intelligence is vitally important, pools have a fundamental role in anyoverall marketing strategy.
Pools are managed by grain market professionals who constantly track price movements, which is very difficult for most farmers to find the time to do effectively."Over the years Atlas Fram pools have achieved excellent overall performance and delivered returns that have consistently been above-average. Although farmers are sometimes able to sell grain on the 'spot' market for more than the 'pool'average, overall many fall well short of the average figure." In addition to consistent returns, Atlas Fram pools have other benefits, such as access to advance payments at competitive rates and credit insurance on all sales.
They are also independently audited to ensure that all receipts are returned to pool members, including full quality premiums where applicable. AtlasFram offers four pool periods for cereals and oilseed rape: a pool for crop movement in August and September, 1 October to 31 December, 1 January to 31March and 1 April to 30 June. The company also operates pools for other break crops. All are supervised by a panel which includes representatives of Atlas Fram and ADM Direct who collectively provide tremendous knowledge of grain marketing, farming and agronomy, thereby ensuring that Atlas Fram Members benefit from the best possible information and expertise.
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