Ask An Expert: Steven Atherton on co-operative storage
What are the costs and benefits of co-operative storage? And how can you use a co-op while keeping control over your own grain marketing?
In this month’s Ask An Expert video, Steven Atherton, Managing Director of grain storage co-op Camgrain, explores the value of using a co-op compared with storing on-farm.
If you’re thinking of getting started with a co-op, or looking to combine co-op storage with direct marketing, hear from an expert today.
Steven covers:
What a good co-op does that an individual farmer might struggle to do economically on their own
How farmers can market grain directly through Hectare Trading while storing it with Camgrain
The transparency you should expect from a co-op over its costs, performance and financial stability
How co-ops are adapting to low yields and the current grain market
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Transcript
Why should farmers consider co-operative storage?
Steven Atherton
Using a grain store such as Camgrain, we’ve got 450,000 tonnes of capacity across three sites that we own outright. It means that a farmer now has an opportunity to redeploy their existing storage.
To buy, to build new storage, you’re talking £200 to £300 a tonne plus to build that. Well, a member can, or a prospective member can pay £42 a tonne and buy into Camgrain. And you own that virtual tonnage in perpetuity. If you ever need to get out, you can sell it at a price probably not too far away from what you’ve already paid.
So if you want to compare that in terms of an asset, a fixed asset that you’ve got to spend to get the storage, it feels like a bit of a no-brainer – it really does stack up.
And I think one of the challenges for all co-operatives is that there’s a little bit of contagion, that one or two have fallen away through finances, etc, in the last three to four years. There’s one or two that are struggling. And I think the transparency that we have at Camgrain with our members on our financials, and the very strong financial footing that we’ve put ourselves on during the last three or four years, really stands us apart as a really protected investment if you want to join into Camgrain. There is real transparency on the numbers.
Despite the yields being down this year, we’re in a very good position. And that shows that we’ve been able to keep our handling charge at £9.90 for the last three years – £9.90 a tonne. It means you can bring your crop in at harvest and it can stay here until the end of June, be sold in the pools or you can direct-market it.
And the other thing that’s on top of that is that, if it needs drying or if there’s ergot or other claims on it, you’re in a grain store – a farmers’ co-operative. These aren’t commercial rates. The drying and ergot charges are not commercial. A lot of the time you might see a handling charge, a headline charge, but then you send crop in, it’s out of spec, suddenly there’s all these additional charges. Well, you don’t get that at Camgrain, because all of that money is recycled back to the members.
We try and make it as cheap as possible because we’re not here to make profit – we’re here to service our members. As long as we can make enough money to keep reinvesting in the store, make it competitive and maintain the assets, then that’s all we need to charge. And we try and manage our costs so that we can keep it as low as possible. And I think keeping that handling charge at £9.90 for the last three years is testimony to how successful we’ve been in that regard.
How do I get started with co-op storage?
Steven Atherton
A prospective new member can invest in Camgrain for as little as £42 a tonne to buy tonnage, which is virtual capacity in the society. Which means year after year after year, you can send your crop in. It’s guaranteed, the quality, because any rejections are borne by the store, not by yourself.
So if you’ve got grain stores at home with leaky roofs or other sort of quality issues, you don’t have to worry about any of that if you send your crop to Camgrain. You haven’t got repair and maintenance bills. And if you can repurpose your storage for padel courts or for other things that people are using their grain stores for, or if they’re just end-of-life and you’re looking at renewal, then I think coming into Camgrain is a great opportunity.
Our main base is in East Anglia. We’re also in the East Midlands and in the West Midlands, but we have members as far north as Lincolnshire and as far south as on the south coast, who bring their crop into Camgrain at harvest.
Can I combine co-op storage with direct marketing?
Steven Atherton
Camgrain has operated in a very similar way for 40 years in that members send their grain in, it’s pooled in an annual winter or late pool and sold on premium contracts predominantly into the main buyers.
But, you know, if we stand still, you go backwards. And we’ve had to evolve and listen to our members, and that’s where we’ve looked to complement our pools with a direct market offering. Members can now send in feed crop – feed wheat, feed barley, OSR – and sell it on the exchange for feed crops, but also direct market through Hectare is an option that a lot of members are now taking up.
We’ve had a fourfold increase in direct marketing of feed crops this year since that opportunity’s been available. Indeed, one member sold some of his crop on Hectare Trading two days ago and was just amazed how easy it was for him, and the price he was able to get by looking at the different prices that were offered to him on the platform. One of my guys worked with him very closely and held his hand through that process, and it’s worked really well for the member.
With the opportunities now on direct marketing on Hectare, it sort of caters for all needs. In the past, some people would like to come in, but they like the independence of marketing their own grain. They want to sell it where they need to sell it to. And I think, now you’ve got that opportunity with the new direct marketing options and partnering with Hectare to sell that grain where you want to and how you want to, rather than it having to be in a pool and determined by others where it goes to and you just be a price-taker for what that pool pays out at the end of the year – you can lock in that price and you can get the money out when you want when you do the sale.
How are co-ops adapting to the current grain market?
Steven Atherton
Given that, this harvest, yields have been down, probably across our main pools probably 20% down, and that’s what a lot of people have seen this year – we’ve taken that as an opportunity to open direct marketing for our members this year on premium crops.
They can now send in premium crops, we’ll store it for them, and they can sell that on Hectare Trading. And that’s a great way for us to trial the opportunity to expand our offering so that all crops potentially in the future, as well as being sold into a pool, can be direct-marketed.
And the Hectare Trading platform is a great opportunity for our members to compare the prices and see what’s available.