price setters or price takers

Farms, like farmers come in all shapes and sizes and how they run their businesses varies too. At one end of the scale there are farmers who farm their land and trade their produce in almost the same way as their fathers and grandfathers did and at the other end of the scale there are those who look for niche markets and try to capitalize on every opportunity that they can.

Commodities, like grain and seed, are traded on the open market with various options available to the sellers. Forward selling ties a farmer in to a set price and contracted delivery date either with or without severe penalties (deductions) if the specified quality is not met. Most arable farmers are price takers and their skill in judging when best to sell or arrange a contract takes both courage and experience. Almost everyone has had a deal or two in their lifetimes they’d rather forget and also perhaps a record high from last year that still puts a smile on their face every time they think about it.

Commercial beef, lamb and pork is also traded, as a commodity, on the open market sold either by deadweight prices, after the animal is slaughtered, or by live weight auction in the markets. Both systems have their merits and what suits one farmer may not suit another.

The price setters are the farmers who dare to be different. Either they produce a premium product, or they add value, or both. A premium product might be: rare breed meat, yoghourt, milk, ice cream, or cold pressed rape oil from oil seed rape to name only a few.

Most dairy farmers are price takers, and this story will have to wait for another blog entry as it is large topic.

Here at Prosperous Farm, Jethro has a foot in both camps. He is a price taker for his arable crops of wheat, barley, beans, oil seed rape and oats, and a price setter for his traditional breed meat which he sells direct to the consumer.

Selling direct to the consumer and gaining feedback is time consuming but extremely rewarding for the producers, especially once you start to build a band of loyal customers. The celebrity chefs are helping this trend to buy from farms, as are Channel 4 with their current food map listing producers, shops and restaurants with wonderful food from all over the country.

Shopping locally, supporting small businesses and understanding exactly how food is produced is brilliant for the future of agriculture. It currently feels like there is an important shift by consumers towards wanting to know more about what we eat, especially meat. Although, I heartily accept, not everyone is able to do this it is at least a start and it should lead to improvements on the supermarket shelf and also teach the next generation that food is grown or reared and is not something that comes in a box or a packet.

How strange I had just finished writing this post when a reader sent me this link.

Now a bit of genuine support and respect would really help the industry to feel appreciated.

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Filed under Country Life, food and farming, rural musings

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