A great problem for farmers in the last 20 years has been price volatility.
The price of a tonne of wheat, for instance, has fluctuated between £55 and £220. The cost of production of 1 acre of wheat has fluctuated between £80 and £250.
Few industries face such clinical input and output swings and even fewer could suitably cope with them, which says a great deal of the resilience of UK farmers.
The next decade could increase volatility, however, whilst the cushion that was the Common Agricultural Subsidies will be phased out, too.
Discussions have been ongoing about how a new insurance product to protect against price swings of wheat, barley, oilseed rape, beef, lamb, milk and even animal feed, diesel, and fertiliser.
Finally, such a product is about to arrive.
So, if the price of milling wheat today is £170 per tonne, you will be able to insure against it falling below a chosen level over a chosen period of time.
If your chosen trigger price is £140 per tonne over the next 8 months, the product will automatically pay out if the price hits £140 at any time over the 8 months insured.
Your pay-out will be the price drop of £30 per tonne minus an excess (let’s say £10 per tonne) and will be based on whatever tonnage of wheat you have elected to insure.
It’s also available on many other farm commodities. It promises to be one of the most exciting advances in helping to stabilise farm income.
Stay tuned to find out more, or call us to discuss your options in the meantime.