January 30, 2014
Volatility and Sustainability
Two of the most common words today in Agriculture but what a massive range of meanings they have to everyone. The current weather Volatility for us right now is seen with very high rainfall and resultant floods. Used to be a time (showing my age) when we had local village roadmen to clear ditches and gullies and rivers were cleaned and trees cleared up to ensure an efficient water course system – privatisation, cost control and look what happens! Very much the same with electricity with a looming breakdown of the local and national grid which lacks investment and now pressure on new green subsidies! Let’s get on and invest in Nuclear – do you agree?
In the US we have everything from -30 degrees through to droughts and right across Europe we have unseasonal high temperatures and very forward crops with temperatures in Romania and Bulgaria running at 15 degrees! I guess the next Volatile factor in Feb/March will be a severe Artic blast and Siberian conditions that causes havoc on European soft forward crops, pressure on yields and grain quality. Around the globe we see more and more significant swings in conditions – is this a short term issue or just more of this planet evolving and challenging this fragile human race! What encourages me and Agrii is our investment in R&D and new science in the world of genetics, traits and technologies to predict, forecast and manage our fragile resources and strive to improve yields and performances on farms in the UK.
But then we see market volatility hitting us with strength of £ – good for some and bad for others. In the last few weeks it has taken £20 tonne off OSR values alone. Commodity fund managers, world politics and swings in yields all cause large shifts and to highlight this currently we have seen around £50 tonne come off early wheat futures values meaning on a 10t/ha crop a potential lost revenue of £500 ha – now that is what I call serious and real volatility. A key driver is large Maize stocks in the US and Eastern Europe which even today is arriving in the UK for distillers, ethanol plants and compounders some £20 tonne below our current wheat price – that is real and hard competition in a global market place!
Yes we can do some things to help minimise this by having a long term marketing strategy or as I often say ‘a little and often does you good’ to build a sensible average and not be exposed. There are plenty of tools for this, buy backs, futures, pools, managed funds but most of all just good trustworthy regular information designed for your business which is where I sit with our local teams, in touch with you and the market requirements.
And the most quoted word ‘Sustainability’ or should it be ‘Survival’! From Food brand managers to processors and supermarkets to politicians, decision makers, green lobbies etc then every single one of them has a different interpretation to suit their argument and often struggle to define it in real and practical terms. To me when the lights go out and we do not have enough food then certain moves to be Sustainable will rapidly move to a new word ‘Unsustainable’! I fear that certain directions being taken in this large EU state will very soon come back and bite us all where it hurts!
Life is very busy for us all and the next few weeks sees me talking and many farmer meetings from the Black Isle (for Southerners that is just across the water from Inverness) and then down to Devon and South Wales across to Norfolk and Kent – let’s hope this rain stops and we get some colder drying conditions!
Finally – Well done on Essex Young Farmers Clubs for a fantastic turn out of around 100 enthusiastic and engaging young people near Chelmsford this week. My colleague Stuart Alexander discuss all issues of technology on farm and decision Support Systems involving Soil Mapping, weather stations, diagnostics and drone aircraft! I covered Food versus Fuel debate and how it currently is impacting on farm together with plant breeding and genetic progress and future developments. Well done to you all and our own Sam Fordham for helping put this excellent meeting together – it is very rewarding for us to see such great enthusiasm and interest.
You can email David your comments and opinions via firstname.lastname@example.org.