French pig farmers learn how to deal with stock exchange

Feed manufacturers are no strangers to the volatility of the protein supply market. Fact that cereals are going the same way is not good news for Europe’s animal production operation chain, from farmers to feed producers.

Transparency would limit speculation-induced market fluctuations, though such transparency is as yet only ideal. G20 mechanisms about data bases and stocks knowledge is nevertheless a first step for feed manufacturers, said Fefac president, Patrick Vanden Avenne at Space after the Fefac praesidium meeting in Rennes, France. It was also the subject of a Crédit Agricole conference about the future of farming practises.

“One mustn’t forget that volatility and continuous growth of price are two different mechanisms. But the two force operators to find solutions to cover price risks,” said Michel Lopez, chef economist. He urged farmers to learn about the futures and options market to cover their supply risks. Eight years ago he would have also promoted the Hanover futures market for pig price security. But now, he recognized that this is not efficient: without fluidity a futures market cannot function well. “All the operators of animal products chain must be strong-willed to organize it. It would take maybe ten years to succeed.”

In the mean time, farmers might secure their feed supply, a new pattern in France. The bank asks for a real knowledge about futures to open a future bank account for a farmer. Banks regularly organise tutorial sessions, either in their own learning centre or through a specialised society like Agritel. “One must learn that he [the farmer] can no longer wait for the cheapest price, but for a compromise between hoped-for-earnings and physical need for raw materials to produce. It is not easy to avoid siren’s song of speculation,” smiled Benoit Cuvelier, a pig farmer who began using futures markets eight years ago.

Faced with more and more skilled farmers, feed manufacturers are also proposing new solutions, for example co-operative Le Gouessant’s ‘l’offre en longueur’. On the web site of the cooperative, a farmer can look everyday at the feed price for the coming months and decide the price he wants. “Then our buyer purchases raw materials for the farmer,” said David Brillouet, pig activity director of the cooperative. He estimates that a quarter of farmers are using this new service.