Farmers cooperatives Members save 000s on energy costs
Despite the recent massive increases in the cost of fuel and electricity on the spot market over the winter period, Members of one of the UKs leading farmers cooperatives have collectively saved hundreds of thousands of Pounds as a result of the Groups specially negotiated contract on electricity and advanced warning of price rises on fuel.
Many farmers who are not Members of a strong inputs-purchasing Group will have paid well over the odds for fuel during the last few weeks as distributors used the shortage of supplies and pressure on deliveries due to the harsh weather conditions as an opportunity to maximise their profit margins, explains Graham Aldrich, Energy Purchasing Manager for the AtlasFram Group, which has more than 1050 Members farming more than 700,000 acres throughout the UK and delivers to over 1500 farm sites, Mr Aldrich states:
AtlasFram constantly monitors world oil prices and obtains daily price quotes from a wide range of suppliers throughout the UK to secure the best combination of delivery time and price. Because we work solely in the best interests of our Members, they were therefore able to avoid the exorbitant charges which many farmers and the public had no option but to pay, emphasises Mr Aldrich.
In November we alerted Members to the fact that fuel prices were likely to increase, advised them to check their tanks and suggested that they order enough to see them through until at least the New Year to avoid the rush and inevitable price increases during December. The appalling weather which affected the whole country in the run-up to Christmas compounded the problem because distributors were inundated with a massive increase in orders, while their capacity to deliver was severely reduced by the snow and ice. As a result, prices to customers increased sharply and delivery times were considerably extended, taking two or three weeks instead of two or three days. This fuelled a panic situation and allowed distributors to demand, and get, almost any price.
Historically fuel distributors use the significant rise in demand during December to significantly increase their margins, but during the last few weeks these have rocketed to much higher levels than we have seen in the past. In mid-November, heating oil was trading at around 44p per litre, on three-day delivery, but by mid-December the price peaked at 64p per litre and delivery times moved out to three weeks. While the public were paying between 70p and 90p per litre, those who purchased through Framtrade, our non-Member trading company, were able to secure supplies for approximately 66p per litre.
Although underlying wholesale market price for fuel increased by less than 10% during December, distributors increased their margins by as much as 600% from the levels seen in November. Now that weather conditions are more normal and demand has eased slightly, prices have fallen back to 51ppl 54ppl and delivery times are back to a more sensible three to five working days. My advice to fuel customers would therefore be to keep an eye on the level of fuel in your tank, keep plenty in there, give adequate notice when placing your order and avoid ordering at peak times when distributors increase their margins and delivery times are extended.
Global oil supplies are plentiful, but there are still local supply issues in some parts of the country and should adverse weather conditions return we could see fuel supplies becoming more expensive and difficult to obtain.
In addition to benefiting from highly competitive prices for fuel, AtlasFram Members have benefited from beneficial prices and delivery times on bottled gas, while those who obtain their electricity through the Group currently pay 8 9 Pence per unit (ppu), compared with the 12 18ppu which many domestic and commercial customer pay on the spot market.
AtlasFram is able to save its Members money on almost any item of equipment or service that is needed to operate a modern farm. Placing the order through the Group is a very simple way for them to obtain significant financial savings on anything from a packet of nuts and bolts to the largest tractor or combine harvester.
Further details about the AtlasFram Group are available at www.atlasfram.co.uk