Union urges cereal growers to be cautious over 2010 production

ALTHOUGH the weather has not so far encouraged any thoughts of spring, John Picken, the chairman of the combinable crops committee of NFU Scotland, has been looking forward and also urging cereal growers to be cautious in planning for the 2010 harvest.

"I want farmers to realise that we are going into this year with more than double the normal tonnage of barley held in stock. As last year demonstrated, the market cannot take a surplus. I would encourage members to only consider growing those crops that they believe they can sell profitably this coming harvest," he said.

The huge volatility experienced in 2009 saw grain prices tumble at the same time as input prices, such as fertiliser, increased and the union is keen that arable farmers and the trade learn from last year's pain and better manage what growers produce to meet real market demand.

Picken admitted that this might mean land being left fallow if the grower was unable to find a market for the crop but that was a smaller problem than spending money growing a crop and then selling at a loss. In trying to sort out the malting barley market, he said the union had a positive meeting with the Malting Association of Great Britain last week to discuss the potential market for spring barley this harvest.

The union also welcomed the fact that some of the main malting barley buyers are now offering growers contracts. These would give some opportunity for growers to better manage risk over the coming seasons.

"Unfortunately, as farmers, we need to learn from last year's financial pain and focus on growing crops that we are actually likely to sell at a viable price. No one could have predicted that the price for cereals would have almost halved just as costs doubled," said Picken.

"As a result, this is no year for taking risks and if the business lost money on growing crops in 2009, then for goodness sake do all you can to ensure that you don't lose money again in 2010!

"There are contracts out there at the moment that could help growers take better account of the risk associated with growing cereals and that is a welcome development.

"Credit is due to those buyers behind these contracts as they are looking positively at providing a longer-term signal and, hopefully, some stability to Scottish growers.

"To further manage that risk, we also need to be offered input prices that reflect our expected returns and crop sales prices. If merchants want us to take up forward positions on malting barley contracts for two or three seasons then they could also be coming out with forward prices for fertiliser for the same period. Growers should not be put in the situation again where we have fertiliser prices rising 100 per cent and crop prices falling significantly."