When one harvest finishes, preparation for the next begins; but as our days shorten by the minute and winter turns the weather colder, it’s crucial to take some time to reflect on the past season – particularly when it’s been tough.
As a result of this year’s contrasting combination of extreme wet weather and prolonged dry spells, this past harvest ranks as the second worst the UK has ever faced. This led to a significant yield decline (compounded by the fact that three of the worst harvests have occurred within the current decade) and resulted in record high imports of cereals, which consequently pushed prices down.
One thing is clear: volatility is the new normal.
Farmers must become more resilient to the price risks stemming from factors outside their control. So, after the challenges presented by this year’s harvest, what can be done to protect their bottom line next year?
The key is to focus on what you can control.
A strong starting point is to look at your margins: what does it cost you to produce grain, and what price do you need to lock in a profit?
From there, you can decide how much of your produce you can comfortably leave exposed to the market, and how much you would prefer to protect with a floor price. This is the decision that really defines your risk appetite.
We believe your internal expertise should drive your financial protection.
We’ll help you translate that knowledge into a clear risk profile; this is the first step to implementing a strong hedging strategy that will allow you to take control of your risk (rather than the weather). We’ll provide you with the tools and insight necessary to establish a clear plan that aligns with your financial needs and turns an unpredictable market into manageable risk.
Hedging isn’t designed to get ahead of the market, but to secure a resilient baseline and ensure you’re not left vulnerable to its peaks and troughs.
Alternatively, you might consider a put option. While it provides a similar price baseline, it gives you
the right to participate in the market if prices rise, offering the best of both worlds: protection against the lows and the freedom to profit from the highs. These tools ensure you can cover your operating costs and establish the stability required for long-term investment.
So, after one of the most difficult harvests on record, it’s time to get back in the driving seat. Ensure that the next time the weather or the markets turn tough, your bottom line remains stable.
Take on a renewed commitment to financial resilience today.
Contact us to find out more about how we can support you, or try our Explore Zone and see for yourself what Attara’s tools can do (no strings attached).
