Pool Marketing

Pools provide both producer and buyer with a more structured way of selling and buying grain.  By having a formal structure through which both parties can enter the market confidence and a better trading relationship can be developed.

Price Stability

Pool marketing is an excellent way of taking a risk averse approach to selling your grain.  The tonnage you subscribe to the pool is “bulked up” with that of other producers and this entire “pool” is released to the market when Organic Arable judge it is appropriate.

Whilst your grain leaves the farm in a single month or perhaps over a couple of months you effectively have exposure to the market for a far longer period of time.  This has the effect of averaging the values the market provides through this period rather than simply taking the price that is available at the time you grain leaves the farm.
In the volatile markets that are a current feature of the grain, trade pool marketing provides a stabilising effect on the price you achieve.

If an 87 tonne parcel of grain is sold in November for a price of £200 and a 58 tonne parcel of grain is sold in December for £220 the total value of the pool is £30160 and each tonne worth £208.

Whilst the producer moving his grain in December may feel that he or she would have been better off not forming part of the pool the reverse in price may have occurred and the earlier movement of grain may have helped increase the pool value.  In the 2009 harvest season values declined through the autumn period and so early sales were beneficial whereas through the 2010 harvest season prices have increased.

Continuity of Supply

The other role of a pool is to ensure supplies are available to the market when the market wants to buy.  It is important for producers to respond to their customers requirements.  When a buyer is looking to source grain it should be available for them or they will look elsewhere (often to imported supplies).  With individual producers acting independently the volumes of grain entering the market at any single point in time can be low.  Producers may have other priorities such as autumn cultivation and planting or lambing in spring.

This can reduce confidence in the ability of the UK producer to supply grain and can lead to alternative supplies being bought.  An example of this occurred in the 2010 marketing season in the organic bean market.  With the wet harvest resulting in late availability of beans.  With few offers coming forward from the UK producer a significant tonnage of organic peas were imported and buyers took the opportunity to cover their requirements.

Buyers welcome the security of supply and convenience that pools can provide.  By knowing that the UK producer is making grain available through a pool structure, buyers will have greater reassurance that the UK can supply their requirements.