Index linked prices
Farming is an inherently unpredictable activity.
In agriculture, planting decisions are typically made on a seasonal basis, but it’s difficult to predict which crops will be most profitable for the coming harvest.
Crop prices can be unpredictable due to changes in the market.
Climate also affects yields, and the prices of inputs such as herbicides, pesticides and fertilisers can fluctuate due to geopolitical factors.
Miscanthus is unique in that it offers growers stable and reliable returns over the long term.
Terravesta guarantees its growers stable and increasing prices by indexing its long-term contracts to inflation.
The low input nature of Miscanthus protects growers from changes in input prices. Although the crop can be affected by climate variability, it is robust and can recover from severe drought and flooding. The rhizomatous nature of Miscanthus allows it to bounce back after such exceptional events.
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The advantages of growing Miscanthus with Terravesta.
Successful planting protocol
Terravesta employs effective planting techniques to ensure the best outcomes for Miscanthus growth.
High performance hybrids
Terravesta has developed high yielding, more vigorous and robust Miscanthus giganteus hybrids.
Special planting machinery
Growers have access to Terravesta planting equipment which is optimised for Miscanthus.
Terravesta’s long term contracts offer secure and stable returns. This is unheard of in the farming industry.
UK farmers who started growing Miscanthus with Terravesta in 2012 have seen the price of their crop increase by 57.24% per tonne by 2024.
This represents a compound annual growth rate of around 3.85%. This is a remarkably steady and reliable growth in an inherently volatile sector.
Assuming a more typical inflation rate of 2.25% for the last 3 years (for 2020, ’21 & ’22), the total increase would still be an impressive 40.07%.
Agricultural markets are characterised by price volatility, which has a negative impact on individual farmers and on the tertiary sector as a whole as it matures.
Find out how Miscanthus can work for you and address your specific farming needs.
A look at the volatility of the world’s most important stable crops.
Consider the price of the staple crops wheat and corn (maize). As an example, in 2012, a tonne of wheat in the US fetched around USD 275, but by December 2023 its price had fallen to USD 238.
For maize, the average in 2012 was $270 per tonne and only $179 in December 2023.
In other words, the price of both crops fell by -14.21 % and -34.70 % respectively over this period of 11 years with no apparent difference in quality of the product delivered.
2022 was an exceptional year for both crops and farmers who planted these crops did well. However, this single good year did not compensate for the losses in the years between 2012 and 2022, when prices were in some cases – 48% lower than in the starting year 2012.
Even taking into account efficiency gains and the introduction of new technology on the farm, the costs of inputs, labour, machinery, irrigation and finance have risen over the same period.
The unpredictability of the climate, market price fluctuations and input price instability challenges farmers.
Allocating part of their land to Miscanthus, especially on challenging soils, provides a reliable source of income for the farm and a financial buffer in difficult years.
Miscanthus does not compete with food crops as it is primarily cultivated on marginal lands which are unsuitable for food crops. Its soil-improving properties can benefit soils in the long term, potentially increasing the area available for food crops.
Source: macrotrends.net (wheat and corn)
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