Purchasing group AtlasFram has launched a fuel futures scheme for its membership to bring down their red diesel costs.
The initiative allows members to fix the cost of fuel for delivery during the harvest period and already has more than 50 members.
Graham Aldrich, energy purchasing manager at the group said: “Following significant fluctuations in the price of fuel during the last two or three years many of our members asked us if it was possible to purchase this key input in advance, at a known price, so that they could budget more accurately. Until now, however, it has generally been financially unattractive to purchase fuel in this way because the premium demanded by suppliers to quote forward prices has been excessive, at up to 6p per litre.
“As a result of active negotiations with our suppliers AtlasFram Group has been able to develop an innovative contract with Watson Fuels which provides members with a much more viable forward-pricing option by keeping the forward premium to a minimum.”
The group has purchased 700,000 litres of fuel for its members that include packers as well as potato growers and arable farmers. AtlasFram has been able to negotiate the premium down to a level that is only slightly above the spot-market price prevailing at the time the order is placed and there is no minimum volume commitment, although members are committed to taking delivery of the contracted amount during July, August and September.
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