Farming: Grain producers urged to take the long view

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WHILE grain growers were caught out last year after selling forward a percentage of their crop, a leading marketing economist has advised that some of the 2013 crop should still be sold – provided the prices give the producer a margin.

Julian Bell, of the SRUC, was speaking this week at a meeting in Inverurie, where he said that at present forward price levels, it would be sensible to lock-in sales for the next crop.

While every producer had their costs and these had increased in the past year, grain prices were at a “good level” where a small percentage of the crop could be sold.

Earlier, Bell had assessed the world grain situation, saying that the poor crop in 2012 along with high prices would affect the equation for this year.

Some 12 months ago, the experts were predicting an increase in world grain production, but because of a series of weather- related calamities the opposite occurred. The reduced production could have been more serious, but Bell said it had been mitigated with demand being choked a little by high prices.

“High grain prices reduced the tonnage going into ethanol production, as well as there being reduced demand from both pig and poultry farmers. This reduced demand for grain in 2012 is the first time for many years that this has happened.”

Bell said there needed to be a big increase in world production just to stabilise grain stocks, but admitted that would not be easy.

“World economies are back on the rise again and with them will come a demand for more grain. Without an increase in production, we will see reserves fall.”

Early estimates of the all- important US maize crop in 2013 are being worked downwards, he said, with a lack of rainfall affecting potential yields.

While he could not envisage a bad harvest in 2013, he admitted that no-one knew what the weather patterns would be and, therefore, yields would be difficult to predict.

Within the UK, following the 2012 harvest that only produced 13.3 million tonnes of grain, imports will be required for the first time for many years.

The home shortage has been accentuated with a major ethanol producer coming on stream and increasing demand.

Although there might yet be some making up on the winter sown acreage, early estimates have shown a 25 per cent reduction in plantings.

The net result will inevitably be, according to Bell, a huge rise in the acreage of spring barley sown. This will give maltsters more choice in the coming year. Even if they take the maximum amount possible, it could leave almost half the 2012 barley crop heading for the animal fed trade or the export market.