As well as supporting calls for a tillage forum to be established, Macra na Feirme would like to remind young farmers of the tools at their disposal to help protect their margins before they put a single crop in the ground.

Methods to safeguard profit margins have become increasingly important as we continue to operate in a highly volatile market due to speculative funds, an ongoing credit crisis, and in particular this year, increased production in the Baltic States, Russia and the US, as well as record high stock piles of grains worldwide that look to be ever increasing. Factors like these all have a detrimental impact on farmgate prices in Ireland, leading to disastrous consequences on farm profitability.

Traditionally, green grain growers are those who don’t have their own drying and storage facilities and deliver their grain to the merchant at harvest time without any prior contract in place, therefore accepting the price offered by the merchant upon delivery. In other words, after all the inputs and labour during the growing season, the green grower is at the mercy of the market conditions at the time of sale.

Fortunately, market tools, such as forward-selling, exist to help provide tillage farmers with some sense of price certainty. Almost all grain merchants offer a forward-selling mechanism whereby the farmer can forward-sell a set quantity for delivery at a predetermined future date at an agreed price and spec. By doing this, the grower knows the price before delivery, if not prior to planting the crop.

In the case of a green grower, the cost of drying and handling will be deducted from the price they receive after delivery. For those who have their own drying and storage facilities, the grower stores the grain until the merchant requires it, but the length of storage will be decided at the time the contract is written.

Many merchants are able to offer a daily price. If the grower feels that this price allows them to make a margin, suppliers can lock in the price and form a legally binding contract with the merchant to supply grain as per the contract details. It is important to remember, as with any legally binding contract, both parties (ie the grower and grain merchant) are bound to the terms of the contract. For the merchant, this refers to the price of the grain with the grower meeting the contracted tonnes and grain specs. Failure to meet the agreed grain specs or tonnage may lead to the merchant legally imposing price penalties on the grower.

Macra’s agricultural affairs committee chair James Barber outlined the added benefit of forward-selling for loan applications. Barber said: ‘‘Forward-selling has the additional advantage of providing young farmers with leverage when seeking credit from the banks. Those farmers engaged in forward-selling are provided with a reduced level of risk due to the already secured grain price, therefore looking more favourable to the banks.’’

To overcome this tough year, Macra encourages all of its members and other young tillage farmers to contact their grain merchants and consider the forward-selling options available to them.

Macra also advise its members of the need to analyse the costs of production on their farm and take this into consideration when deciding if forward-selling is the best option. The option of forward-selling provides the grower with security, by knowing that no matter what the market conditions are at harvest, they are locked into a profit-making price. Forward-selling can be vital in the early stages of planning, particularly when choosing what crops to grow or how much land to rent and it can often be the decider whether or not a certain crop is at all worth sowing.

Macra na Feirme, through the Skillnet programme, is in the process of developing a forward-selling course with the aim to roll out the course in the near future. Details of the course will be released in the coming months. For information, contact Paul Smith at psmith@macra.ie