Flexible Forage Trading Agreement Caters For Cost Variability

Farmer and rural contractor industry groups have worked together on an initiative to safeguard their members in the face of fuel and fertilizer price volatility.

"The new Forage Trading Agreement has been developed by Federated Farmers in conjunction with Rural Contactors New Zealand," Feds Arable Chairperson Colin Hurst says.

"It gives growers and harvesters/purchasers an agile contract that can cater for spikes in the cost and help ensure no-one is unfairly out of pocket."

There hasn’t really been an issue on this front in the past but COVID-19, the disruption to supply chains and consequent "roller-coaster" prices for fuel and fertiliser sparked the problem, Colin says.

"Then we had the curve ball of the war in Ukraine and those impacts. Last year the price of fuel went through the roof, and some rural contractors running expensive machinery with fixed costs basically lost money."

Federated Farmers and Rural Contractors NZ contracted NZX to develop and regularly update fuel and fertiliser cost reference indices. Armed with that independent data available to members through both organisation’s websites later this month, growers and contractors can take advantage of the flexibility of the new Forage Trading Agreement to select what variable costs they want to move, and at what rate.

"It doesn’t tell either party how to price, as everyone has their own cost model and pricing model. The template provided with the agreement is a guide to assist with being able to calculate the change in price," Colin said.

The new agreement and template to assist in calculating the variable costs are available now, and only one copy needs to be purchased in a 12-month period. Additional copies can be printed off as a pdf by the user, allowing them to create multiple/unlimited agreements.

"The reaction from farmers/growers and contractors has been very positive and we would be keen for any feedback to ensure suitability for all forage crops and also to cater for other key input costs.

"We think this is a valuable tool for the sector, one that offers a bit more certainty in these uncertain times," Colin.

• Copy

and paste this link in your browser to access the new agreement - https://survey123.arcgis.com/share/570afd8e946643839fb152437a4c97c0

© Scoop Media