Is now the time to take advantage of market conditions?

Chris Solt
Chris Solt

It’s a seller’s market, and farmers should take advantage, says Chris Solt of Lovewell Blake.

Chris Solt

For a very long time now, farmers have been both cost-takers and price-takers – they have had very little say on the cost of inputs such as seed, fertiliser and fuel, whilst the price that they are paid for their produce has largely been dictated by their customers.  Their only hope of making a living has been to ensure that the value they add to the process – inputting their expertise, and hoping for benign weather – is delivered as efficiently as possible.

The first part of that equation, having to accept ever-increasing costs, isn’t going to change any time soon.  Buying groups certainly have their place, but in a world where supply is interrupted by war, political upheaval and economic uncertainty, for the time being at least we have to grin and bear the extra costs being loaded upon us.

So, if farming is to build a sustainable future, it needs to tackle an issue about which discussion has been taboo for too long: forcing up or at least maintaining current output prices, in other words what they are paid for the goods they produce.

With the current economic crisis, the good news is that the conditions might be right to start doing just that.  A plunging pound is making food imports ever-more expensive, which will mean UK buyers may be forced to look more towards domestic producers.  Those same purchasers are chasing a more limited supply (even without the potential issues caused by Brexit), which by the most basic rules of economics should result in prices being driven up.

That this has only happened patchily is potentially due to the out-of-date selling process and the fractured nature of the farming industry.  Each individual farmer is but a very small player in a game where the purchasers are, by-and-large, huge corporates with big negotiating power.

Up until now, the main alternative has been for individual farmers to produce food products themselves from the raw materials they grow, but again, few are big enough to do this effectively.  This has been a market where both the middlemen and the big retailers have held all the cards.

But, no longer?  With serious supply issues, at last the agricultural industry is in a strong negotiating position, and it could seize this moment to break free of the traditional model.  The sector as a whole should stand up for itself when it comes to selling its wares.

We already have buying groups.  So why not turn that model on its head and create selling groups, co-operative organisations which will have the collective heft that individual farmers can never hope to wield?  Such groups may have the confidence to walk away from negotiations if unrealistic prices were offered.  Producer Organisations operate in the horticultural sector but are not commonplace in this region.

East Anglia is a very important food hub.

The new Broadland Food Innovation Centre adds to market leading ventures such as the Norwich Research Park and John Innes Centre. We should be concentrating on working together to add value for all of us involved in the sector, for example through producers pooling resources and sharing packing and processing costs to add value to products in a way which might not be possible individually, and which could put them all in a better position than simply selling the raw primary product.  Businesses such as Condimentum and Nova Farina are prime examples of what can be achieved, albeit with more specialised crops, as are many of our successful artisan food producers. We should also look at ways that these examples can be mirrored with more ‘mainstream’ crops and produce.

The truth is that farmers produce what food processors and retailers need, and what they can no longer easily source elsewhere.  It is a seller’s market, and farming should seize this moment to take more control of their output prices once and for all.

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