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The organization of French co-ops, "Coop de France" proposed, last week, to the French Minister of Agriculture, Bruno Le Maire, a series of measures with the objective of minimizing the volatility of prices in the livestock sector.
The solution would enter into the regulation of contract relations between livestock farmers and feed producers through the creation of long term, voluntary feed supply contracts. With these contracts a recorded livestock farmer will be able to know what the price of his feed will be. At the same time, the farmer, and specifically those on swine farms, should also be able to know what price his animals will sell for and therefore, assure cost margins. The only way of knowing what price animals will sell for is through differed delivery (an actual market where prices have been set for a certain date of delivery, which should not be confused with a regulated futures market with standardized contracts and clearing houses). The buyers and sellers agree on a price for delivery on a future date based on the expectations of their market. In the case of pork, Coop de France is calling for the creation of, parallel to the current cash market, a differed delivery contract to guarantee the visibility of prices for at least one production cycle.
The market in Plérin (Côtes d'Armor), which controls the price of pork in France, has agreed to study this option, which could soon give way to the introduction of estimates for differed deliveries.
The solution would enter into the regulation of contract relations between livestock farmers and feed producers through the creation of long term, voluntary feed supply contracts. With these contracts a recorded livestock farmer will be able to know what the price of his feed will be. At the same time, the farmer, and specifically those on swine farms, should also be able to know what price his animals will sell for and therefore, assure cost margins. The only way of knowing what price animals will sell for is through differed delivery (an actual market where prices have been set for a certain date of delivery, which should not be confused with a regulated futures market with standardized contracts and clearing houses). The buyers and sellers agree on a price for delivery on a future date based on the expectations of their market. In the case of pork, Coop de France is calling for the creation of, parallel to the current cash market, a differed delivery contract to guarantee the visibility of prices for at least one production cycle.
The market in Plérin (Côtes d'Armor), which controls the price of pork in France, has agreed to study this option, which could soon give way to the introduction of estimates for differed deliveries.
http://www.coopdefrance.coop/fr/index.html
