opinion The upside of empty retail shelves


The sight of empty supermarket shelves is becoming routine, but perversely, one that might have a beneficial outcome for the nation’s farmers and us as feed suppliers. No ready supply of tomatoes or cucumbers is one thing; running


short of beef, lamb, pork or chicken would be something else entirely. UK farmers, attending a high-profile seminar series in late February and early March, made a fairly predictable comment: “Didn’t they learn anything from last year’s egg shortage?” They, of course, refers to the major supermarkets, whose farm


produce buyers are pretty predictable in their determination to pay as little as possible to keep retail shelves fully stocked. For farmers, empty retail spaces are viewed as a ‘nice reminder’


of what can happen when producers don’t get paid enough to plant, harvest and store produce, or to feed and finish farm livestock. Logic would suggest that the supply end of the food chain is in a


relatively rare position of strength and that now is the time for producers of beef, lamb, pork, and poultry to renegotiate their sales contracts with the major supermarkets. Unfortunately, securing forward contracts isn’t something the


farming industry is particularly good at. That’s according to Richard King, Head of Business Research at Andersons, the UK farm consultancy behind the seminar series. “If we’re serious about this as an industry,” he said, “then maybe


long-term contracts are something we ought to do more of in the future.”


While stressing that the feeling among seminar delegates was


that there ought to be more of a partnership approach between farmers and retailers, he added that his ‘inner cynic’ was already warning that memories are very short in the food sector and that, after a few months of saying nice things to suppliers, buyers will revert to their normal way of doing business. Meat producers have long complained that their margins are


always too tight for comfort. If they can use today’s ‘tomato window’ to their advantage, it could help us all to move forward to a new level of trading strength. It’s always easier, after all, to secure a price rise for your own


product when the cost of everything else is also shooting up. You become part of an inflationary wave rather than a stand-alone item that merely draws attention to itself. We are currently in a retail marketplace where product supply is more important than price and we need to act accordingly. Asked how he thought feed supplies and prices might perform in


2023, Mr King said the general view was that the UK could be heading for ‘quite a decent harvest’ this year. His ultra early optimism is based on favourable autumn 2022 conditions which enabled many farmers


PAGE 2 MARCH/APRIL 2023 FEED COMPOUNDER


to just kept going, resulting in a bigger than normal winter planting. Since then, thanks to several spells of benign weather, crops have come through well and are in good condition. Experience, quite apart from today’s empty shelves, suggests


we shouldn’t celebrate the size of the 2023 harvest just yet. Better to forward contract, lock in the bulk of your required raw material requirements, and rest securely as the year unfolds. That’s the sensible, good risk management, approach, of course,


which only ever gets noticed when the spot market moves against you. Back inside the farming seminars, for example, a lot of hugely sensible growers have been grumbling that their 2023 fertiliser, which they bought on forward contracts, now looks ridiculously expensive when compared to the spot market. Being told by Andersons’ farm inputs specialists that they had


followed the correct risk management strategy, didn’t help. Spending more than necessary rarely satisfies. The positive in all this is that some of the economic turmoil of the


last 12 months has begun to fade, largely due to Europe’s success in managing energy supplies over what has admittedly been a relatively mild winter. To quote the European Commissioner for Energy, Kadri Simson,


the progress made over the past year to phase out the EU’s dependency on Russian fossil fuels has been ‘remarkable’. “Russia’s energy blackmail has failed,” she told a high-profile


energy and transport meeting in Stockholm, before adding that it would be a big mistake to conclude that the EU’s energy test is over. “We have won the first battle, but there is still a long fight ahead of us. There is no room for complacency.” For the time being, however, there are signs that businesses are


starting to think longer term again. That was certainly the mood back in the farm seminar room where the bulk of producers are focusing on how the new England and Wales Agriculture Policy will stack up in terms of delivering profitability. Farmers in Scotland, meanwhile, are continuing to take a long


hard look at the slow unfolding of the devolved government’s quite different farm policy which appears to place climate change absolutely front and centre. While policies in the rest of the UK include concern over climate


issues, the Scottish approach prioritises this issue, creating a risk that other farming issues might get a bit lost in the midst of the new policy focus. Feed and food producers in Ukraine would love to have such


simple problems to deal with, of course, a reality which continues to be our greatest focus, even as we risk-manage and profit-plan our own 2023 ventures.


Comment section is sponsored by Compound Feed Engineering Ltd www.cfegroup.com


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