Lobbying by the National Farmers Union (NFU) to prevent a major financial EU directive threatening farmers’ ability to use the futures market, appears to be paying off, although the union wants individual farmers to make sure their local MPs understand exactly what’s at stake.
The union is seeking a number of key exemptions to the Markets in Financial Instruments Directive II (MiFID II) which is due to come into force in January 2017. In its original state, the directive would have resulted in the use of forward contracts and futures by farmers being regulated exactly the same as will apply to banks and other financial institutions.
This, said the union, would impose an economic and bureaucratic burden on farmers, which is why NFU chief combinable crops adviser, Guy Gagen, has led the lobbying effort on this issue in the UK and EU.
Mr Gagen (pictured above) said he is now “very pleased” to see that the EU drafting body behind the directive, the European Securities and Markets Authority (ESMA) has incorporated “important points” in its latest version, based on the NFU’s input.
With many farmers using futures trading to forward budget on grain sales and feed purchases, the union believes its influence on the MiFID II process is potentially a “big win” for the industry. There is still more to be done, however.
“We are still some way off seeing how the FCA will implement this directive in the UK, so we have time for farmers to talk to their local MP about why it needs to be done with as little disruption to producers as possible,” said Mr Gagen, adding that when the issue comes up in government discussions, farmers need the right people to be aware of the impact on the ground.