What makes a farming business futureproof in the current environment?
Openfield experts explore the shortfall in global wheat, barley and corn stocks; and fertiliser pricing volatility.
It’s a good question and hopefully one that you have all asked yourselves, but I also wonder how many of your family asked themselves the same question over the years, writes Cecilia Pryce, Openfield head of research, compliance & shipping. The answer should be that the need for the products you produce ensures that you get paid the right value to cover costs. The problem is arming is largely not conducted in a factory and every farm and farmer is different. There is no average in this game but if you could ask for one thing, other than cash, that would help your business become futureproof what would it be? Would it be some form of education? Or maybe more information so you could make better decisions or even a better piece of machinery or grain
store.
It’s a tough question but how many of you would say more demand? Ultimately land is likely to always be in finite supply and the way we are going so will farmers and farms, but in the last seven years global consumption of wheat, barley and corn has risen by 205 million tonnes whereas production has increased by 159 million tonnes. That’s a 46 million-tonne shortfall which is slowly reducing global stocks – and so the question is, with extremes of weather, can we globally afford to keep dropping our stock levels? Over a large number of years, we have witnessed the impact of genetically modified organism (GMO) varieties in bolstering the corn and soya crops alongside many others but what does the next GMO yield improver/guarantor look like? Is it precision breeding techniques? Do we believe that the UK cereal crop yields can ever improve again?
To put things into perspective the world’s five-year average wheat yield is 3.55t/ha, which, when compared to the UK’s 7.755t/ha, doesn’t make us look too shabby, but if we keep taking land out of production in the UK and our crops continue shrinking, we will quickly be at the point where we aren’t selfsufficient. If global supply can’t keep pace with demand, then that must be good news for
farmers, especially as land and water are currently finite resources and globally we are all only one poor harvest away from lack of food, yet many really don’t understand that. The UK Food security Report 2024 was an interesting read but it didn’t even touch on this issue and in my mind, it was frustrating due to its naivety and bizarre focus on semiconductors.
The world is facing many issues – be that economic, political or weather, but countries need farmers and food. The key for us in the UK is to learn how to be long-term resilient and to focus on what we do well. Controlling input costs, maximising return per hectare, efficient storekeeping and marketing final product are all difficult balances to get right, but maybe it’s the time for everyone to engage more, read more, learn more and more importantly admit what you are good at and ask for help where you aren’t so hot on a subject – or we may all go hungry.
Fertiliser matters
A number of factors contributed to further pricing volatility as we headed into January, explains Openfield fertiliser manager Lucy Hassall. A strong USD held ammonia values firm and contributed to higher urea prices, along with an increased demand in purchasing ahead of the application period. Urea production issues in Iran have added additional pressure to Egyptian manufacturers where product has already been in tighter supply.
India issued another tender in early January due to them only being able to secure 187,000 tonnes out of the 1.5 million tonnes they required pre-Christmas. Demand has increased globally, and we have started to see the effects of the production outages and curtailments that have been in place due to high energy costs.
UK nitrogen terms have been issued on an allocation basis for February delivery, again due to tighter supplies following reduced production rates. It’s difficult to see any change in the current bullish outlook for the short term, as we head into spring with high demand, high energy costs and fewer available tonnes.
