Grain contract options in the dry

30 Oct, 2010 02:00 AM
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 Emerald Group's WA general manager Rob Proud assured growers that there were still many options available to those who would have trouble meeting volume commitments this season.
Emerald Group's WA general manager Rob Proud assured growers that there were still many options available to those who would have trouble meeting volume commitments this season.

GRAIN contract washouts have been a huge concern to growers this season but there is still a range of options for those who are going to have difficulty meeting their volume commitments this harvest.

Marketing companies like the Emerald Group are able to offer some of the most flexible options and processes for grower contracts.

"This year we have introduced a product called the 3 Windows contract which allows growers to deliver contracted grain in their preferred delivery period," Emerald Group's WA general manager Rob Proud said.

"Growers have the choice to deliver all or part of their contracted tonnage this harvest, in July next year or at harvest next year.

"Growers have that choice up until the end of October."

The Emerald Group also allowed growers in the worst affected areas to roll their existing cash contracts into the 3 Windows contract for little to no cost at all which gave them the multi-season delivery option, or to roll over existing cash contracts to next year.

Some marketing companies have also offered straight cash contract washouts if requested.

"For a number of years now we've applied a maximum cancellation fee on all pool contracts," Mr Proud said.

"This gives our growers their worst case scenario in the event of total crop failure.

"This option is still available on our pools and is very important and valuable to growers in seasons like the one we are now experiencing."

Emerald has also moved pool contracts to growers who are willing to take on existing grower pool contracts.

"With the perceived shortfalls on contracts we will be working through this following harvest and as it stands the worst case scenario for our growers is their maximum cancellation fee," Mr Proud said.

"However we are, and will continue to, work towards minimising this for our growers.

"Our ability to improve the situation for our growers will depend on the market direction, contract receivals and total receivals this harvest.

"Working through the shortfalls following the harvest will ensure growers have no need to pay any washout fees now minimising any cash flow difficulties for growers.

"It also gives us the chance to achieve a better outcome, providing more rollover or cancellation options for growers."

Many grain marketing companies in WA offer flexibility due to the size of the businesses and their dedication to WA growers.

Emerald developed and introduced a very high amount of flexibility to grower marketing programs, where there had been very little in the past.

"Emerald is committed to WA," Mr Proud said.

"Our business is still growing despite the season and receiving excellent feedback from our grower customers.

"Yes, it will be a tough season for all, however we are here for the long term and not just in the good times.

"Testament to that is the recent expansion of our team with new offices opening in Albany and Merredin."

Mr Proud said marketing companies were a support to WA growers and farmers should get in touch with their local representative if they needed assistance or advice on this year's contracts.

"We are here to help and as mentioned we have a number of options available to our growers," he said.

CBH also has options available to growers who have done it tough this year.

This year CBH kept the increase in freight rates to a minimum and has taken certified grower receivals at the Kwinana Port Terminal in order to reduce associated costs.

CBH has worked with the Agriculture and Food Department to set up a Seed Donation Program and has this week introduced new grades for wheat, barley and oats due to the impact of the dry conditions on quality.

This is a proactive decision by CBH in response to the poor seasonal conditions and will help provide growers with flexibility and more options to build value in the tough season.

"CBH Grain is providing options to growers who have forward sold grain but are unable to fill their contracts," CBH head of accumulation Grant Thompson said.

"Generally, CBH Grain would not washout contracts until the end of the delivery period but given the poor season and the difficulties growers are facing, we are allowing them to washout earlier in the season.

"CBH Grain is giving growers an option to roll their contracts over to the 2011-12 season.

"This means the washout amount is also rolled over and will be recovered from grain payments in the 2011-12 season."

CBH is providing options to growers to source feed grain for livestock and supporting the domestic market and it's also undertaking a lot of work with customers and industry to secure long term supply agreements for WA growers.

"We're a grower owned business which means all business decisions are made in the best interests of our growers," Mr Thompson said.

"In a difficult season such as this, many growers will be looking for support and advice on the options available to them, something we provide through our regional manager network.

"For us it's about assessing individual circumstances and doing what we can to help minimise the impact of the dry season."

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