August 5, 2009: Oilseed rape pool delivered outstanding returns

The 2008 crop season oilseed rape pool, operated by the AtlasFram Group, delivered outstanding returns paying members over UK£318 per tonne, comprising UK£294 per tonne ex-farm, plus an average quality bonus of UK£24.
“This represented an outstanding performance during a period in which spot market prices fell to as low as UK£220 per tonne,” comments Oliver Hitchcock, the company’s crop marketing manager.
“The result demonstrates clearly the benefits which derive from our policy of working closely with end-customers to maximise the advantages to members.
However, it is important to stress that selling decisions remain with us and we calculate bonuses individually to reflect the quality of crop, which each member produces, he adds.
“Prospects for the 2009 crop have improved substantially since the AtlasFram Group closed its first oilseeds pool in February. At that time, members were naturally cautious regarding yield expectations, but are now asking us to launch a second pool to market the increased tonnage which they expect to harvest this summer.
“Commodity markets have become increasingly volatile during the last two years, making it almost impossible for farmers to keep track of developments and price changes. Pools provide a very valuable risk-management tool because they produce above-average returns and protect against market extremes.
Robert Rous, chairman of the AtlasFram Group, says that when it comes to purchasing inputs, operating on a large scale is clearly an advantage.
“However, we believe that marketing favours an individual approach focused on smaller, more specialised contracts to achieve the best returns. Because we know exactly what our pool members will produce each season we can fulfil customers’ requirements precisely, which maximises returns, minimises operating costs and is the reason why we have gained a number of important new contracts across a range of crops.
“Although most farmers focus on yield, the prices which they achieve for their crops actually have a much greater impact on overall returns.
“Farm businesses, which are in the top quarter in terms of financial performance, are in that position because they produce significantly higher-than-average yields and have significantly lower-than-average fixed/variable costs compared with those in the bottom quarter.”
More importantly, however, they achieve higher prices through better marketing. Whilst farmers have only a fairly small influence over variable costs and a medium impact on fixed costs and yields, their marketing policy can dramatically impact on overall returns, says Mr Rous.
“We believe that the oilseeds markets currently offer excellent opportunities. Prices are being supported by increasing demand from China, which is moving reserves out of currencies such as the US$ into commodities, while production in countries such as South America has declined, leading to tighter supplies.
“The prospects for improved financial returns will be further enhanced by the availability of new varieties and improved seed treatments this year.”
AtlasFram Group now has a turnover of UK£140 million and 1050 members. 

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