Cereal prices - What's the NFU doing?

Arable farming is facing an economic challenge every bit as severe as fellow farmers in other parts of the industry. Recent figures from the Rural Business Research unit showed wheat production costs in 2013/14 were £169/ tonne - £143/tonne on English cereals farms (average wheat price for the period was £153.30). Since 2013/14 wheat and other grain prices dropped sharply and apart from a brief rise toward the turn of 2015/15, have remained below the cost of production for a year now.

wheat physical and futures prices, east of england

With market prices set firmly below costs for all the major arable commodity crops (Wheat, Rapeseed, Barley), and input prices stubbornly high (Ammonium Nitrate, the largest individual wheat crop input, dropping by only 8% since last year and 14% on two years ago, while wheat prices are down 29% over the same period) arable farmers are suffering a prolonged period of economic difficulty. NFU active in a number of areas to help address rising costs and ensure the means to cope with price volatility remains available to farmers.

NFU has recently joined other farming organisations in writing to the EU Commission asking for officials to investigate the EU fertiliser market and the need for continued strong trade defence measures including fertiliser tariffs and anti-dumping duties on imports. Read more here.

Direct and indirect access to agricultural commodity futures markets has been a key component in helping British farmers cope with market price volatility in grains. Unless the law is changed before 2017, farmers selling physical crops forward, using normal practice of futures quotes to agree the price, will be caught in the claws of financial market regulation aimed at banks and investment funds but totally inappropriate for small businesses like farms. NFU remains anxious that farmers should not be regulated out of their own markets as the MiFID II directive, financial markets regulation also partly designed to address fears for future rapid price rises, edges closer to implementation in January 2017 and has farmers in its scope.

Times are tough for arable farmers, and while there’s little we can do about global commodity prices, the examples here are just two places where NFU is offering help to regulators to avoid making the tough economics of crop production even more difficult.

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