This year’s ex­treme weather could lead to smarter ap­proaches on farm fod­der re­quire­ments, writes

Irish Independent - Farming - - FINANCE FARMING -

THEY say that it is an ill wind that does not blow some­body some good. Well, the past 12 months have cer­tainly had their share of ill winds but maybe, just maybe, those ill winds have blown some good that might ex­tend long into the fu­ture.

I am think­ing of how the demand for fod­der and for­age has re­sulted in mas­sively in­creased straw prices, lift­ing ce­real mar­gins from vir­tu­ally zero to a place they haven’t been for quite some time.

The pur­chase of im­ma­ture ce­real crops as whole crop has emerged as a pos­si­ble out­let for the tillage farmer, as has the grow­ing of grass, maize and fod­der beet for sale.

Over­all, these de­vel­op­ments may not be just short-term re­sponses to rare weather con­di­tions, but may set a pat­tern for the fu­ture whereby the more in­ten­sive farm op­er­a­tors con­tract out part of their win­ter fod­der re­quire­ments.

This can have the ef­fect of killing a num­ber of birds with the one stone, such as an as­sured ad­e­quate win­ter fod­der supply along with the cre­ation of an en­larged and pos­si­bly bet­ter graz­ing plat­form.

Des­per­ate sit­u­a­tions can

CON­TRACT GROW­ING

Last April I viewed with in­ter­est the launch of Tea­gasc’s Con­tract For­age Agree­ment Tem­plate.

It was as if they had a pre­mo­ni­tion of what lay ahead.

Its launch was proven to be timely as we were just near­ing the end of a six-month pe­riod of non-stop rain, hur­ri­cane con­di­tions and snow the like of which we had not seen for decades — con­di­tions that had wiped out all re­serves of fod­der in the coun­try.

Lit­tle did Tea­gasc or any­body else know that we were on the cusp of the worst drought in most peo­ple’s mem­o­ries, and in­stead of plan­ning to re- build fod­der re­serves, the fo­cus quickly changed to ad­dress­ing a se­ri­ous fod­der short­age.

Ac­quir­ing re­place­ment fod­der will be the main fo­cus for the next six months but plan­ning for the fu­ture must also be part of this process.

We need to do ev­ery­thing we can to pre­vent a re­cur­rence of the scary level of un­cer­tainty that many farm­ers are ex­pe­ri­enc­ing as we face into the win­ter.

CON­TRACT BEN­E­FITS

From the dairy or live­stock pro­ducer’s per­spec­tive, en­ter­ing into a crop supply con­tract vir­tu­ally en­sures supply and price cer­tainty and is one less worry for the farmer to con­tend with.

It may also en­able him/her to em­bark on a whole farm re­seed­ing pro­gramme that may al­le­vi­ate fod­der short­ages in the fu­ture while also hav­ing a very pos­i­tive ef­fect on pro­duc­tion.

The ben­e­fit for the tillage farmer is that it of­fers a guar­an­teed out­let for his crop with price cer­tainty.

This may make costly crops such as maize or fod­der beet an at­trac­tive al­ter­na­tive to ce­re­als, par­tic­u­larly where ini­tial and in­terim pay­ments are writ­ten into the con­tract.

TYPES OF CON­TRACTS

There are two types of con­tract that could be con­sid­ered.

The Tea­gasc tem­plate is es­sen­tially a con­tract crop pro­duc­tion agree­ment based on a min­i­mum supply un­der­tak­ing where the con­tract is based on a spec­i­fied acreage in a spec­i­fied lo­ca­tion and a spe­cific va­ri­ety.

While the tem­plate sug­gests price per tonne as be­ing a ba­sis for pay­ment, it could also be based on a price-per-acre fig­ure.

The al­ter­na­tive type of con­tract is sim­ply a supply con­tract where the grower en­ters into a writ­ten agree­ment with the pur­chaser to supply a fixed ton­nage at a fixed price ref­er­enced to dry-mat­ter anal­y­sis by a spec­i­fied date.

Such an agree­ment may suit the larger grower, who will have the com­fort of know­ing he has a guar­an­teed out­let for his pro­duce at a guar­an­teed price.

It will also suit the pur­chaser as it lessens pres­sure on his graz­ing plat­form and as­sures him that a pro­por­tion of his win­ter fod­der needs are se­cured.

CON­TRACT CON­DI­TIONS

A con­tract crop­ping or supply agree­ment will set down a num­ber of un­der­tak­ings and the con­di­tions at­tached.

I have set out a sum­mary of the main con­stituents of a typ­i­cal agree­ment in Ta­ble 1.

The agree­ment, like any col­lab­o­ra­tive ar­range­ment, must ben­e­fit both grower and pur- Do chaser and be built on hon­esty, trust and good open com­mu­ni­ca­tion.

It is vi­tal that both par­ties hon­our their com­mit­ment to the agree­ment in or­der for it to be suc­cess­ful and sus­tain­able into the fu­ture.

That said, any such agree­ment is a legally bind­ing con­tract and de­fault­ing will have its con­se­quences.

A copy of the agree­ment can be found at www.tea­gasc.ie, but in­tend­ing farm­ers should seek guid­ance from an agri­cul­tural spe­cial­ist who is ex­pe­ri­enced in this area.

Martin O’Sul­li­van

Martin O’Sul­li­van is the au­thor of the ACA Farm­ers Hand­book. He is a part­ner in O’Sul­li­van Malone and Com­pany, ac­coun­tants and reg­is­tered au­di­tors; www.som.ie

cre­ate a whole new mind­set and I think 2018 may be the start of some­thing big in terms of far smarter use of our over­all agri­cul­tural re­sources. farm­ing@in­de­pen­dent.ie

Newspapers in English

Newspapers from Ireland

© PressReader. All rights reserved.