How to reap as you sow

Feb 29 2008 Evening Gazette

TEESSIDE farmers should take heed from recent volatility in wheat markets and take steps to price protect their business, the Home Grown Cereals Authority warned at a meeting in Darlington.

Grain growers were told that, while prices were in their favour, they would be advised to gain a better understanding of the futures market in order to take advantage of locking in a minimum price for tonne as security against market falls.

“We are trying to encourage growers if not to use them, then at least to understand how futures and options work in terms of price protection,” said Mike Mendelsohn, senior economist with the HGCA.

He said early indications suggest that this year’s world wheat harvest would be at least 4% up this year and prices may well fall back.

He said there was evidence that farmers in the past had been taken advantage of by unscrupulous brokers - even in a bullish market. “They had been sold options at more than market costs,” he said.