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 considerable input and output swings and even fewer could cope with them – this says a great deal of the resilience of UK farmers.
The next decade could further increase volatility, as alongside the current obstacles, the cushion that was the Common Agricultural Subsidies is due to be phased out too.
Discussions have been ongoing about how a new insurance product could protect against the price swings of produce such as wheat, barley, oilseed rape, beef, lamb, milk and even animal feed. As well as diesel and fertiliser.
Finally, the product has arrived.
Now, you can insure against any of your produce falling below a certain level over a chosen period.
For example, if you were to insure your wheat at £140 per tonne over the next 8-month period, then if it drops below this amount at any time, then your insurer will automatically pay out.
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.
This is also available on many other farm commodities. It promises to be one of the most exciting advances in helping to stabilise farm income.