Dear Mr. Clive Aslet

Even the barley barons, whom you might expect to be rolling in the predicted boom in cereal prices, speak through gritted teeth. They are adjusting to a new era of extreme price volatility – fantastic if, like the Cambridgeshire magnifico Oliver Walston two years ago, you\’ve managed to sell your wheat for £200 a tonne; hopeless when, as now, the same stuff only fetches £80 a tonne. These excessive fluctuations have nothing to do with traditional gluts and shortages: they\’re caused by speculators betting on commodities\’ futures.

No, sorry, but futures markets reduce price volatility, not increase it.

They also transfer the risks of price volatility from the farmer to the speculator. That\’s what they\’re there for, see?

3 thoughts on “Dear Mr. Clive Aslet”

  1. Add to that the fact that (I think) Single Farm Payments must be claimed in May in Euros and paid (if desired) in Sterling at a later point in the year. Having protection against (or benefiting from) currency volatility through some kind of option is surely sensible when it constitutes a major part of your income.

  2. I think you need to be careful in asserting that futures markets reduce volatility – the evidence is rather mixed. I’d suggest they tend to reduce volatilty but sometimes can exacerbate it.

  3. If Mary Ellen Synon’s blog is right, the Single Farm payments will only ever be in Euros in the future as the Lisbon Treaty means we WILL have to join the Euro. It’s just a matter of time. My betting is when sterling is below parity with the Euro will be when pressure is brought to bear on us to give up the pound.

    Unless of course the dollar collapses this year, but that’s for another day.

    It’s far, far later then you think.

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