Early in his farming career Summerton, S.C., grower Chris Cogdill sold a good corn crop for $1.75 a bushel while his father stored his corn and sold it that winter for $3.20 bushel. On-farm storage and marketing have been a big part of his farming operation ever since.
When Cogdill was a year old, his father Leonard and mother Shirley sold a gas station and started farming on 18 acres of land — Chris and his brother Ken grew up on that family farm.
After a year in college and dead certain he wanted to be a farmer, Chris bought his own farm. A few years later his brother, Ken, bought his own farm.
A few years of independence convinced the three family farmers to become one family farm — incorporated as L&S Farms.
Together they now grow about 6,000 acres a year, with about 60 percent of it in corn. They also grow wheat and soybeans in a double-crop sysem.
That early lesson on the value of holding a crop in storage convinced Chris the necessity of on-farm storage and they now can store a million bushels of grain on their farm.
In addition to on-farm storage L&S Farms has a state-of-the-art dryer that allows them more leeway in making both marketing and production decisions.
“When you don’t have to haul your crop long distances and you don’t have to wait in long lines at harvest, you have a lot more time to spend on the crop,” Chris says.
On-farm storage pays the biggest dividend in their marketing efforts, but it helps indirectly on most of things they do on their farm, he adds. They have enough storage capacity to store a year’s worth of nitrogen and have traditionally bought fertilizer in the fall. Last year was different, Chris says.
The high cost of fertilizer, especially nitrogen, forced the family to look for alternatives. They replaced most of their conventional nitrogen fertilizers with chicken litter — a move Chris says appears to be working out.
Putting out the litter takes a lot longer than conventional fertilizer. Having the flexibility of storing crops during the cropping season gives them a lot bigger window to do things like switching nitrogen sources.
Chris started handling the business aspects of L&S Farms when he was 23 years old. Though he is active in all aspects of the family farm, his brother and father make more of the production decisions, allowing Chris more time to concentrate on marketing and developing business strategies for the farming operation.
“I never forgot that time early in my career when I got caught with $1.75 a bushel corn. Based on that lesson, we’ve been building storage bins for more than 25 years. It is likely we will add some more storage this winter,” he adds.
“At harvest time the basis price for your grain is the weakest. If you can tuck it away until the excess is gone, eventually mills start paying up and the basis starts creeping up. Knowing how long to wait and when to buy and sell comes from a long history of ‘learn as you go’,” he says.
In addition, Chris works with several top local and national crop marketing experts. Marketing schools, he says, have been invaluable in helping him learn the fine art of grain trading.
“I subscribe to Strategic Marketing Service, which is owned by Jerry Gulke. I’ve been a client of his for a long time. I get a fax every morning telling me when to hedge, how much to hedge, when to buy back hedges. If there is a mid-day update, it comes across my cell phone.”
Strategic Marketing Services Inc. provides marketing strategies for agribusiness, including marketing production, purchasing inputs, and other financial and management decisions.
Owner Jerry Gulke says the main focus of SMS is to manage risk associated with producing crops or raising livestock. “We can enhance the financial aspects of production agriculture through strategic recommendations with hedging and timely cash sales, but we also educate our growers on how the price discovery mechanism is used to determine commodity prices,” Gulke explains.
“We also use Edgar Woods with Palmetto Grain for the cash side of the markets. I’ve been with Mr. Woods for a long time, too. He charges a penny a bushel, and is always there to help us move crops on the cash market,” Chris says.
The South Carolina grower says they quit growing cotton eight years ago because of the difficulty in marketing their crop and because of changes in insurance regulations. “We feel like the risk is no greater growing corn, it’s a lot easier to grow and easier to market,” he adds.
“Edgar Woods can always sell corn on the cash market, but cotton was not so easy to sell at some times of the year,” he says.
“I’ve tried a number of marketing services over the years, but these two have worked the best for our farming operation. I also attend a marketing school conducted each year by Scott Mickey, with South Carolina Farm Management Association and Clemson University. For growers wanting to know more about grain marketing this is a good program and one that is open to growers in both North Carolina and South Carolina,” Cogdill says.
He says all the information he acquires from marketing experts is invaluable in his farm marketing program. “Once we get our budgets done for our crops, we begin looking for prices that we feel are worth putting out a hedge. We might put a cash contract out on soybeans, but all our wheat and corn are hedged,” Chris says.
“We know we’re going to store our wheat, because there just isn’t going to be a good cash price at harvest time. If there is a carry in the market, for example a spread between July wheat prices and December prices, instead of hedging in July, we hedge it on out to December. In December, if prices on the Board have dropped, you are making money on your hedges, and by then the basis is coming up. This allows us to take advantage of the futures hedge and the basis appreciation.”
All these strategies are based on being able to store your crop and sell it when prices are optimum. Last year, he says, pointing to his grain bins, those would have paid for themselves.
“Clearly that doesn’t happen every year, but last year was a good one for on-farm storage. In about eight of 10 years there is a significant advantage to storing your grain. In most cases, high quality grain storage bins can pay for themselves within five years,” he adds.
On farm storage also allows a grower to get his crop out of the ground before weather conditions — like a hurricane in his part of the country — change and deteriorate the quality.
At harvest time elevators are backed up and a farmer can sit in line three to four hours waiting to get unloaded. That’s a critical point in production of other crops and having the grain bins allows you to spend your time managing other crops rather than sitting and waiting to sell the crop you just harvested, Cogdill emphasizes.
Waiting to unload a crop and having to leave a combine sitting in a field costs a lot of money. “There are a lot of indirect savings you get from being able to store your crop when you harvest it,” the South Carolina grower says
The new dryer put in last year gives them even more options. The dryer has a cooling fan that keeps the bin cooler and allows them to put higher moisture corn in the bins.
“This year we dried our wheat. At harvest time, we got rain nearly every day and the dryer and storage capacity saved us a lot on quality. To get it out of the field, we had to harvest it high on moisture. I don’t want to make a habit of drying wheat, but we had to this year,” Chris stresses.
On-farm storage has provided highly cost-effective risk management for L&S Farms for many years. This year they added some irrigation, which offers even greater risk management.