Boortmalt explains pricing structure...no agreement with IFA

In a strange turn up for the books Boortmalt described its pricing structure for the 2019 season to growers who attended the Teagasc malting barley conference held at two venues yesterday (Enniscorthy and Athy).

AgriLand attended the conference in Athy last night (Monday, February 18). Pierre-Eric Souplet, a markets specialist with Boortmalt in Europe, described how the system will work for 2019.

No agreement has been made between Boortmalt and the Irish Farmers’ Association (IFA).

Based on the FOB Creil

The FOB (Free On Board) Creil malting barley price will be used as a reference price.

This is a base price at 20% moisture for unscreened barley, delivered to store and the historic haulage allowance between Boortmalt and some of its growers is included (where applicable).

A bonus of €10/t will also be paid for distilling grade barley.

Last week’s offers

Offers were made to farmers last week. AgriLand released details of these offers on the day they were announced.

Also Read: Updated: Boortmalt makes an offer to farmers

Souplet outlined these offers at last night’s meeting; however, one of these offers is already closed.

The first offer made on Monday, February 11, was described as the “Model offer”. This is based on the average FOB Creil price during the growing or marketing season from weeks 15 to 38. Farmers can place up to 80% of their barley into this option.

A second offer was made last Monday (February 11), which Pierre also explained. This fixed price choice was €190/t (base price at 20% moisture). However, this offer is closed.

Rules of commitment

The rules of commitment were outlined. The first was that a protein bonus/allowance will be applicable on all tonnes of malting barley.

Details of two different scenarios are set out below – one where a farmer agrees to commit 100% of their malting barley acreage and the second where a farmer does not commit 100% of their malting barley acreage.

If a farmer engages 100% of their malting barley acreage at their normal yield potential, before the middle of March (possibly March 15) the following will happen:

Boortmalt will support the farmer in the case of a lower yield than the potential committed;
Boortmalt will offer the harvest price for surplus grain, if a yield greater than the original potential yield committed is achieved.

If a farmer does not engage 100% of their malting barley acreage and so does not commit to the pricing model:

Boortmalt will publish “spot offers” between plantings until harvest;
These offers will have a limit in volume and duration;
These fixations will be considered firm and due;
FIFO rule in the different fixation amoritization;
If at harvest the farmer cannot honour all his/her spot fixations, he/she will assume the consequences on the missing tonnage;
The farmer will not have priority to sell surplus grain at harvest.

It should be noted that many growers signed up to a fixed price offer of €230/t for up to 20% of their contract last September.