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Press Release

New farmer's procurement agreements guide

12 October 2011

A new procurement agreements guide for selling livestock has been published by EBLEX and the National Farmers Union (NFU).

The two organisations have produced 'A Farmer's Guide to using procurement agreements for selling livestock' as an at-a-glance checklist to ensure they understand all aspects of procurement agreements before committing to anything.

A future procurement system is where a predetermined price or pricing mechanism is agreed between two parties for supplying products of a specified quality, quantity and timescale. They are widely used in agriculture, although rarely in the beef and sheep sectors where spot pricing is still predominantly used. It is anticipated that with price increases and a shortage of supply abattoirs will increasingly promote the use of such agreements in the beef and sheep sectors.

The guide gives an overview of the various types of agreements and encourages finishers to thoroughly think through price, quantity, specification, delivery and penalty implications.

Liz Ford, EBLEX regional project manager, said: “Many pigs, cereals and potatoes, for example, are already sold under contract arrangements. For many beef and sheep farmers though, this will be a new area and they may not have first-hand experience of using them. With rising prices and short supply it's very likely that abattoirs will look to tie people in on agreements. As such it will be a useful guide for farmers.”

Alistair Mackintosh, NFU livestock chairman, said: “Having a clear understanding of the market and its demands is crucial for farmers and producers who need to remain competitive in a turbulent economy. Although prices have started going in the right direction, it is vital that farmers remain focused on ensuring they can maximise their returns from the marketplace, and get the best returns when selling finished stock.

“The NFU is pleased to be working with EBLEX to help achieve this goal, which will contribute towards the long term profitability of the livestock market. This Farmers Guide contains practical recommendations for producers to assist their business.”



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