AHDB gathers UK industry to tackle market volatility

Published 28 January 16

AHDBGrouplogo _cmykexclusionAHDB has embarked on an ambitious new initiative to tackle volatility in agricultural commodities markets.

Experts from across industry gathered in Westminster at the launch of the AHDB Volatility Forum on 27 January.

The event saw farmers, processors, retailers and trade associations come together to seek practical solutions for businesses affected by market uncertainty across agricultural supply chains.

Forum members were tasked with maintaining a long-term focus on volatility management and providing a knowledge exchange hub between the industry, supply chain, academics and policy-makers.

The event was chaired by AHDB Dairy’s Gwyn Jones and saw Graham Redman from the Andersons Centre set the scene with a paper on market volatility and impacts on farm profitability over recent years. HSBC’s Allan Wilkinson followed with paper looking at opportunities to better deal with volatility across agriculture.

After the break, AHDB Lead Analyst Jack Watts outlined mechanisms for the forum to explore in-depth: forward contracts, formula pricing, derivatives, cooperation and integration, strategic business and government-backed.

He said: “There is unlikely to be a one-size-fits-all solution to managing volatility and it certainly won’t happen overnight. Commodities markets are both highly complex and delicately balanced as we have seen to some extremes across agricultural sectors in recent times.

“Like the markets, interest in volatility management has been cyclical. In times of high prices, businesses tend to be in a better position to weather market impacts and the level of interest wanes as a result.

“AHDB is in a unique position to bring together and provide the industry with a sustained focus on finding practical solutions to volatile markets through the good times as well as the bad.”

As part of this morning’s event, forum members were asked to prioritise areas of work to shape the group’s focus. The top priority was identified as helping the industry better understand the commodity cycle and its impact on agricultural business strategy. Shortly behind was the need to upskill the industry in its approach to assessing risk likelihoods, impacts and prioritisation. 

The launch of the AHDB Volatility Forum coincides with the inauguration of the European Commission’s Agricultural Markets Task Force, which is due to report in the autumn on policy and legislative initiatives to improve farmers’ position in the supply chain. Part of the Volatility Forum’s remit will be to apply practical considerations to any recommendations arising from the initiative, announced a fortnight ago (13 January).

A long-term work programme will be determined by a Steering Group to ensure the initiative maintains momentum and produces tangible results for the benefit of the industry.

AHDB is interested in hearing from anyone interested in the Volatility Forum about the skills and knowledge they could offer the initiative. Contact Jack Watts on 024 7647 8760, jack.watts@ahdb.org.uk or @JGCWatts