Farm Tender

Buying Forward

Extracted from the Farm Tender weekly Newsletter - Sign up and get the email every Wednesday morning before 6 am.

By Dwain Duxson

Firstly sorry for not getting this newsletter out at the usual time of 6 am on a Wednesday morning. I was away from my computer longer than expected. Anyway, let's get on with it.....

The world has changed since Covid started, and luckily enough, the Farming sector has been one of the beneficiaries. We have done well compared to other industries.

We keep mentioning that we have never seen Farmers so confident as they are now. Prices for the things we sell are mostly excellent. Land prices are fuelling a Farm equity boom, and it's pretty much enjoyable to be on the Land.

But, there are some headwinds that will not spoil the party, but make it a little less enjoyable. Yes, the cost of things that we buy has risen.

So with that in mind, will we see Farmers adapt to the current supply chain issues and buy more stuff forward, so they know they have got it.

I heard last week of a Farmer that bought 200 shuttles of Glyphosate at around $4 a litre. Why? Because he was worried he was not going to be able to get it. And now there is a shortage, his purchase has been vindicated. Not everyone can just go out and buy such volumes of stuff, and in this case, the price has tripled too.

Record high prices for Chemical, Fertiliser, Fuel, Steel, Machinery and Equipment is putting people off from buying large volumes. That's understandable.

Some Farmers are already thinking about putting one or two fewer paddocks of Crop in because of the rising cost of the above.

ORM put out this article a couple of weeks ago that related to what rising Fertiliser prices had on the bottom line.

If things settle a bit, as Farmers, should we better plan when it comes to buying stuff for the Farm?

Have we been complacent in the past by knowing that we will be able to get things when we want them? Living hand to mouth.

Are those days past us? Will our supply chains recover and go back to normal?

Missing out or not being able to access something you really need is frustrating. Worst of all, it could affect the outcome of the season, and in turn, the bottom line.

Record prices for the things we sell are fantastic, but record prices for what we buy are not. There is not that much margin in it, and as Farmers, we are always wondering what is around the corner.

There are lots of questions we need to ask.

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