17 June 2011

Market volatility is more preferable to a static market argued Openfield Chairman and farmer, Richard Beldam. Mr Beldam was one of the panellists in the jam-packed Oxford Farming Conference ‘CAP and volatility’ debates at the Cereals Event earlier this week. He said that if markets had remained static he would still only be getting £92/tonne for his wheat.

Fellow panellist Richard Whitlock, a grain market and biofuels specialist, said that “volatility only affects the mind, not your wallet.” He argued that price shifts will nag at the emotions, but rarely affect incomes if farmers are using forward selling options well. He warned growers to be wary of more complicated derivatives options like ‘put and call’ trades, but added that speculators were generally a good thing for the markets because they even out the highs and the lows.

A delegate from the floor made a valuable comment – he claimed that “natural market factors” were responsible for volatility not the speculators. He added that there are 6,000 hedge managing over $3 trillion, but that only 10% of this is invested in commodities, the rest is in things like government debts.

Mr Whitlock made a call for the NFU to help drive the industry towards enabling farmers to buy inputs forward: “gas and oil can be traded up to four years forward, so why can’t some of the products reliant on these also be sold forward?” He said this would even out even more risk for farmers in the future.

Gareth Morgan, RSPB’s Head of Countryside Conservation, also on the 16^th June panel, commented on the calls from parts of the industry for volatility payments to hard-hit farmers. He said that generally governments don’t pay out on volatility because it is generally a factor of risk management adding that growers should think carefully about a preference towards income protection measures versus green payments in the current CAP reform negotiations.

Four debates were held over the two days of the Cereals event, two on “CAP Reform & Market Volatility - part of the same debate?” and two on “The Introduction of New Technology on Farm - Successes and Failures”. Other speakers included: Cereals host farmer, David Knott, Alexis Pouye Managing Director, Offre et Demande Agricole, NFU President Peter Kendall, David Ellerton, Technical Development Director, Hutchinsons and Dominic Dyer chief executive, Crop Protection Association.

Other topics raised at the debates included the distribution of food, population and resources across the world and the need to focus more on soil health rather than just rely on chemicals to improve production.

Delegates were also urged to enter the Oxford Farming Conference/RASE Science with Practice award, sponsored by AB Agri. It recognises technological developments that have made a significant difference on farm. The closing date for entries is 30^th June.

For more details about the award and Oxford Farming Conference see www.ofc.org.uk.