Andrew Baldock's PRICE+ Story
For the Baldock family there is little room for error on their mixed cropping and sheep operation in South Australia. They rely on decades of farming experience in marginal conditions to grow the best crop possible, but when it comes to getting the best price possible they use AWBs PRICE+ range. Incorporating a variety of different PRICE+ contracts into their business helps maximise returns by protecting against falls in the market while capitalising on price rises. Farming in a fringe cropping region on the Eastern Eyre Peninsula comes with higher production risk so being able to capture gains through marketing is more important than ever. Andrew Baldock is gradually taking more responsibility of grain marketing as the farm transitions to the next generation. He says strong marketing strategies are becoming more important in modern day farming. “Doing your own marketing is just as important, if not more important, than the agronomics side of things these days,” he said. “It’s easier to pick up 10% additional price than it is to pick up additional yield, so we need to pay more attention to it.”
The Baldock’s have used Basis PLUS contracts in the 15/16 and 16/17 seasons, tailoring their contracts depending on the basis and futures market movements throughout the season. They were able to secure an extra $15/tonne by locking in futures prices and then participating in the upside of the basis. “It turned out to be a really good product, because at the time we took out the contract our futures were very good but our basis was quite poor,” Andrew explained. “So it allowed us to participate over an 18 month period and still be able to pick up changes in both basis and futures. We locked in the basis later on and really added value to that contract as opposed to a straight cash contract on the day.’’
Andrew locked in grain at over $310/tonne and at that time the price was tracking at $245/tonne. “It was a pretty good move,’’ Andrew said.
The Baldocks also used Pacer Ultra contracts to put a floor in their forward sales and still benefit if the futures market moves higher within their elected time frame. “These contracts were useful because we saw a volatile market going forward and we were unsure about whether that would be upside or downside,” Andrew said. “Essentially you’re participating in the upside without having to be hit by a downturn in prices. I believe the market is getting more erratic, and with volatility comes opportunity but the trick is knowing when to take it. PRICE+ takes some of the risk out of hedging in those markets.” They also used the comparable post-harvest contract, Market Ultra, locking in the base price to be paid at harvest while still being able to participate in a rallying market after harvest.
Taking advantage of the Premium Offer program enabled the Baldock’s to add over $17/tonne to their old crop grain price in exchange for a commitment to sell a portion of their tonnage to AWB the following year. “We’ve taken out a Premium Offer the last couple of years,” Andrew said. “It’s great to be able to receive a premium for leaving an offer where we would be happy sellers anyway.”
Andrew is looking forward to working with AWB into the future to ensure a secure, profitable family run farming business. “Our business has formed a pretty strong relationship with the local AWB representative over the years,” he said. “They’ve supported us and we’ve supported them as well.”
He says local knowledge is equally important as working with a company of scale. “We use AWB because of the local representatives but also because of their global knowledge,” he said. “They’re a large company that have a wider scope of market intelligence that they are able to pass that on to us and it seems to be pretty good advice. They’re a reputable company at a time when there is a lot of concern about companies going belly up and security of payment.”
For more information on AWB PRICE+ please call
1800 447 246 or see the AWB PRICE+ page