FFNZ Launches Cereal Silage Contract

Federated Farmers has developed a cereal silage contract in response to the growing need for contractual relationships between suppliers and purchasers of silage, particularly cereal silage.

"The demand for cereal silage contracts is an indication of the growing relationship between arable and dairy farmers, and the need for certainty in agreements" says Neil Barton, Chairman of the Federated Farmers Grains Council.

"When farmers deal directly with each other, they have traditionally relied on verbal agreements which may have potential for conflict. Contracts clearly set out conditions and minimize opportunity for misinterpretation, so disagreements may be avoided. Farmers can eliminate the brokerage cost of dealing through an agent and feel secure in the agreement.

"There is still much room for the development of feed supply relationships between arable and dairy farmers," said Mr Barton. "Contracting or forming strategic alliances for feed supply will bring down transaction costs and give increased certainty to both parties."

"Matching buyers with sellers on the spot market is not an easy task in the agricultural industry, and time is money. Forming long-term direct relationships reduces those intangible costs that many farmers don't take into account."

Mr Barton thinks that feed supply relationships between arable and dairy farmers will continue to grow in number and scope as dairy farms source more and more feed from off-farm. The Federation's silage contract will help create lasting supply relationships.

The new cereal silage contracts are available to Federation members by calling Federated Farmers on 0800 FARMING (327 646).

ENDS

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