Cropping

Pool use may lift from 10pc if reports, performance help inspire confidence

Grain Central, November 25, 2016

GROWERS considering putting new-crop tonnage into pools have been urged to look at research by Profarmer, released in partnership with GrainGrowers, shedding some light on the intricacies of pool operation.

Australian Grain Under Management, report 1, was released this week, and lists considerations growers should make when they are looking at delivering to pools, and how they differ in terms of exposure to price risk.

Report 2 is due out during early December, and will look at the past performance of pools by port zone and what growers should look for when assessing their performance.

In recent years, pools have captured as little as 10 per cent of the national crop.

“With better transparency and understanding of operators and products, that volume could lift to 20-30pc of the national crop,” Profarmer chief analyst Hannah Janson said.

GrainGrowers general manager policy and innovation David McKeon said both reports were valuable resources for growers who were using or looking at using pools as part of their grain-marketing strategy.

“Pools can play a successful role in the grain marketing toolbox as long as growers have a clear understanding of the operations and limitations of pools and the risks involved,” Mr McKeon said.

“Holding a portion of your crop back by putting it under management in a pool provides the chance to capture possible post-harvest market spikes and growers will consider pools against options such as on-farm storage.”

“Equally it can expose sellers to losses from market downturns and must be considered against cashflow requirements for the farm business.”

“GrainGrowers’ number one message to growers is that it is their responsibility to do their due diligence across all aspects of their grain marketing options — pools are no exception.

Mr McKeon said growers needed to understanding how managed grain arrangements worked, and analysing the past performance of particular pools was a vital step in the due diligence process.

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Ms Janson said the key message to growers from the report was not to make decisions based on the estimated silo returns at harvest.

“These are just estimates; there is no guarantee of final performance. It is critical growers choose a pool with a strategy and risk exposure matching their risk appetite,” Ms Janson said.

The Australian Grain Under Management Report is the fourth annual summary of pools operated in Australia, and this year included 11 operators, up from nine last year.

 

Source : Profarmer, GrainGrowers

 

 

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