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Ian Pye Northern Farming Conference Hexham Thank you to the - PowerPoint PPT Presentation

Oct 06, 2022 •469 likes •808 views

PRICE RISK MANAGEMENT FOR THE UK DAIRY SECTOR - COWS LOOKING OVER THE HEDGE Ian Pye Northern Farming Conference Hexham Thank you to the Harold Cowburn Trust & Nuffield Farming Scholarship IAN PYE THE WHY Involved with several

  1. PRICE RISK MANAGEMENT FOR THE UK DAIRY SECTOR - COWS LOOKING OVER THE HEDGE Ian Pye Northern Farming Conference Hexham

  2. Thank you to the Harold Cowburn Trust & Nuffield Farming Scholarship

  3. IAN PYE

  4. THE WHY  Involved with several boards including NFU  Externalities beyond my control

  5. PRICE RISK MANAGEMENT = MANAGING PRICE VOLATILITY

  6. MY JOURNEY INTO USING THE MARKETS!

  7. RISK MANAGEMENT FOR DAIRYING?  Using financial tools to provide long term business stability

  8. EUCOLAIT – SEEING THE PROBLEM  Financial Problems  High Prices- product substitution  Confidence in the supply chain eroded  Investment, R&D and innovation become limited  Loss of skills

  9. EU FARMING UNIONS AND MEP‟S SEE A STORM IS GATHERING – BUT WHY DO WE NEED THIS!

  10. EU EXPANSION- MARC HAVERMAN

  11. EXPANSION IN IRELAND  1% excess in production = 14% change in market price

  12. THIS IS HOW WE CURRENTLY NEGOTIATE MILK PRICE

  13. ….OR EVEN LIKE THIS!! #SOSDAIRY

  14. WHAT A BREATH OF FRESH AIR! “DAIRY FARMERS LOOSING MONEY IS THEIR CHOICE” CARL BABLER PRINCIPAL, ATTENBABLER MARCH 2012

  16. USA  Unprotected producers lost $14 Billion in 2009  Cyclical behavior of milk market

  17. THE HISTORY OF THE FUTURE  Hershey Chocolate manufacturer exposed to price peaks  Could trade futures on all other inputs  Protect menu price

  18. DAIRY FARMERS OF AMERICA

  19. DFA- VOLATILITY IS A DIRTY WORD!  Contracts to match producer cheese, milk (class 3)  Advancing into Milk-Feed Margin  Volume is limited per producer & Credit Checked  Contract 1-24 months ahead  Min 9000l /month

  20. THE „VANILLA‟ HEDGE  Establish risk level in business  Purchase an Option that suits  Now have the Right to Sell this Futures contract at known time and cost Minimum Price Insurance for Dummies!

  21. HEINS DAIRY

  22. NIALLS DAIRY - MANAGING RISK

  23. WHAT DOES THIS ALL MEAN TO ME- A Humble Dairy Farmer

  25. UK PRICE VOLATILITY

  26. MILK PRICE HAS SEASONAL BEHAVIOR

  27. FUTURES MILK PRICE CONTRA SEASONAL BEHAVIOR

  28. UK EXPOSURE  Dairy Co encouraging exports  NFU recently visiting Japan  New manufacturing facilities coming on line  Diary buyers consolidating

  29. EU DAIRY FUTURES  European manufacturers want to trade  The Exchange infrastructure is already in place  Where are the EU farmers……? …..Waiting for the trough?

  30. UK SITUATION:  Manufacturer / dairies take the lead  Farmers need to understand their own exposure  Dairies need to co-ordinate and take a proactive approach  Need has to be understood by Unions and Government

  31. SUMMARY  THE MARKET WILL BECOME MORE UNSTABLE POST QUOTA  VOLATILITY WILL AFFECT THE FUTURE OF THE SECTOR  DAIRY‟S THAT USE RISK MANAGEMENT CAN ENSURE THEIR STABILITY

  32. THANK YOU  ianrpye@aol.com  07754852600

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