Low risk contracts help niche market growers
Most arable farmers grow for an end market they know nothing about. No other manufacturing industry would do that, Mike Porter of Technology Crops tells Chris Lyddon
Technology Crops is an international company built on buying specialist crops, under contract, directly from growers.
“How many businesses manufacture a product with no known end market?” asks Mike Porter of Technology Crops UK. “I know it’s a traditional philosophy that farmers have had, but as we move into a more volatile market, as we move away from subsidised production, one has got to focus on a professional way of executing business. There is no more professional way than to have a contract.”
That doesn’t necessarily mean growing only on contract. “It’s an eggs-in-baskets scenario,” he says. “You don’t necessarily grow every tonne of produce on your farm on a specialist contract. It’s very valid business sense to have a percentage of your production on a known commodity price with no risks attached.”
Technology Crops started in 2004. “It’s been growing and developing, not only existing plants and strains but also new varieties and strains coming through,” Mr Porter says. “It’s a slow development of a specialist market, a very niche market, ultimately done for the benefit of all those in the chain whether it’s the grower or the end consumer. Everybody has to gain.
“One of the mainstays in the UK is the high erucic acid rape that is fairly familiar to a lot of UK growers, but not to all,” he explains. “I have been involved with high erucic rape since 1984. It’s very familiar to me since the old days when merchants were much smaller and little individual cropping opportunities were in smaller companies’ hands.
“We’re very big in the high erucic rape market, where we can offer contracts. We like to think that we come to growers with the most user-friendly contracts, farmer-friendly contracts,” he says. “We provide risk-averse, we provide minimum price contracts on a multi-year basis. I think we’re the only company in the UK to do that. We also construct contracts around the FOSFA [Federation of Oils, Seeds and Fats Associations] terms so we’re replicating every other double low style contract.”
Erucamide is used in the plastics industry as a slip agent. “It’s a niche market,” says Mr Porter. “It’s not a massive market, but it’s big enough and it’s slowly growing. There’s a bit of food use approval for erucamide as well now so we’re seeing major food companies starting to include it in some of their pastes.”
Technology Crops also deals in borage and lycium. “We have contracts for both of those,” Mr Porter says. “We have in the past contracted other specific varieties, although we don’t have anything else specific at the moment.”
The company has released a new species onto the market this year. “It’s a very old and traditional plant called corn gromwell. If you speak to somebody who’s been on-farm and knows their weeds for some generations, they will know it,” he says.
“It was a fairly prolific weed in the post-war era, then agrochemicals came along and destroyed it. It’s on the endangered species list with Natural England, but we’ve found a very good property within its seeds. If you crush it and extract the oil you come up with an oil profile very similar to Omega 3, to a fish oil profile. It has very promising potential.”
The plant is in trials. “We have been breeding and trying to improve the lines with NIAB over the past five years and we’re about to release a reasonable area for spring 2013. Going forward we will have winter planting varieties for the autumn of 2013 and then a far greater quantity for the spring of 2014,” Mr Porter reveals. “That’s going to be heading primarily for the soft capsule market, the high-end
market in the Omega 3 oil requirements.
“Our contracts are always ‘the produce of’ so they can never be oversold or undersold, or if there’s a crop failure, they never face any defaults because we have what we call the Acts of God clause,” he says. “If a farmer plants his oilseed rape then has a hail storm and loses it all and he’s sold it all, that’s a bad enough punishment, let alone having to go and replace the stocks.
“With a minimum price it’s risk averse. We’ve picked up a lot of business with the professional growers, some of the bigger groups, and very much geared towards producing for a known need and having a protection mechanism should some eventuality go against them. We think they’re probably some of the fairest grower contracts on the market.”
l Michael Porter is a director of Technology Crops UK.