•  Guy Reeves 

    Food - Sector focus

    Author: Guy Reeves, Relationship Director
    Publication date: 01.08.2010

     
    The increase in soft commodity prices, which could potentially lead to higher global food prices, is currently the sector’s main talking point. The spikes in cocoa, coffee and wheat in particular seem to occur more frequently and show higher levels of volatility.

     
    While ‘hedging’ exposure of inputs and outputs can help to smooth volatility, there’s a balance to be struck between hedging at the wrong level (so losing out on higher returns) and not hedging, thereby incurring possible losses.

     
    Companies led by strong and experienced management teams have coped best. Planning ahead for different levels of cost, they’ve maintained open and frank conversations with key stakeholders and have studied business plans closely in order to position themselves for good returns.

     
    As part of an overall strategy, though, it‘s essential for your bank to fully understand your business — not only the goals, but also the issues and challenges facing it — so that it can provide the guidance, support and financial solutions necessary. Our sector expertise has helped us get closer to customers, and we aim always to be a trusted advisor to our clients.

     
    Quietly confident about the future 

     
    We expect the UK and global economy to continue to stabilise in 2010/2011, supported by interest rates that are forecast to remain low throughout the short term. We have seen modest growth in the UK economy, and with commitment, planning and the stability of a strong business team, many businesses are now in a good position.

     
    As Relationship Director responsible for our portfolio of large food manufacturers, I study food industry trends, assess the individual needs of customers and provide solutions. In my view, the sector is robust and should approach the future with a sense of optimism.

     
    Source: This article was first published in Lloyds Banking Group - Perspective Magazine Edition 2.
     

2/25/2018 1:20:19 AM