Farmers from Cheshire learned how price averages can help them to make grain marketing decisions, at a meeting of the AHDB Warrington Monitor Farm, on 8 November.

The 25 farmers were led through a number of price risk management strategies by AHDB analyst Arthur Marshall, who advised farmers to average both revenue and prices over a five-year period, to see how their businesses perform.

Arthur said: “Average is the minimum standard when it comes to price. An averaging strategy is one of the easiest marketing strategies you can employ. When you’re trying to work out what a good price is, look at the averages of the daily price – a good price is when the day’s price is higher than the rolling average.

“The worst thing to do is not to have a strategy. Be clear on what you’re trying to achieve for your business.”

The group heard how it could help to sell a little each month throughout the marketing season, in order to take advantage of the averages.

Robert Cross, Warrington Monitor Farm host, said: “All of us learned today that forward selling could be a more prudent choice for many of us, though a lot of us have hesitations because we don’t want to over-commit ourselves. However, forward selling could give us a better average than just trading within the growing season once you know what you’ve got – because then, you’ve in reality only got six months to trade in rather than the full 18 months.

“The meeting also showed us that there are many different types of trading and different ways of looking at it, and there are different ways in which we can try to get a better price from the market.”

Farming in partnership with his father John at Clifflane Farm, Robert grows over 280ha of combinable crops on a seven-year rotation.

On his own marketing strategy, Robert told the group how he sells oilseed rape at harvest because of space and cash-flow requirements; barley is sold spot November to February, and a third of his wheat goes to pools.

He said: “With grain marketing, my primary challenge is to know whether to ‘stick or twist’. It’s to know whether it’s an upward or downward- trending market, and whether it’s going to drop significantly or just a few pounds. It’s about making the decision on the day about whether selling is correct or not. It’s hard to know throughout the season whether you’re making the right decision or not.”

Benchmarking benefits

The group also heard from Robert how using AHDB’s benchmarking programmes were helping him to identify his costs and so to set his grain marketing strategy.

“By finding out my cost of production, I am in a much better position to respond to grain prices to control my gross margin in the best way possible. It also allows me to compare my farm’s performance with other farms, so I can seek out areas of improvement,” Robert said.

Robert advised other farmers thinking about benchmarking to come to it with an open, honest and realistic mind.

“It’s a useful tool to know whether you’re doing better than someone else, or whether you can improve your own performance by tweaking various things. It gives you a greater understanding of your farm, your own profitability and where you can go next.”

Get involved

At the next meeting on 13 December the Monitor Farm group will be discussing precision farming, led by Ivan Grove from Harper Adams.

Robert said: “I’m thinking of going for variable seed – not necessarily to save money but to put things in the right place.”

Ivan will lead the group in talking through the opportunities and challenges around precision farming, and how farmers could avoid potential pitfalls.

Judith Stafford, AHDB Cereals & Oilseeds Knowledge Exchange Manager, said: “The Monitor Farm is a forum for sharing ideas, asking questions and challenging each other. All the topics for meetings were chosen by farmers at the launch meeting for the Monitor Farm in the summer, so we’ll be covering issues that are of real interest to farms in this area.”

To join the meeting, contact Judith Stafford, AHDB Cereals & Oilseeds Knowledge Exchange Manager, judith.stafford@ahdb.org.uk, 07981 55663.