When you grow a crop for market, it makes you a producer. When you market a crop, however, it makes you a business partner.
In a panel discussion on alternatives to marketing North Carolina commodities at the Joint Conferences of the North Carolina Corn, Small Grains and Soybean associations recently, Wade Hubers challenged farmers to be “more proactive in marketing grain. Farmers need to be adamant about price.”
Other panelists discussed alternative marketing opportunities.
A proactive marketing stance, says the Hyde County, N.C., farmer, means having a plan or a strategy and then a fall back plan. “Most of the time, we just hope for the best.”
A marketing plan involves “knowing the numbers,” Hubers says. For example, ending corn stocks are the lowest they've been in 28 years. “All those numbers, including USDA reports, give you information to use down the road.”
Many options exist for the grain producer: Forward contracts, put options, pools or storage on farm, to name a few. “We need to decide how to use them and price and manage our risks,” Hubers says.
For example, a cash contract puts a floor under the market when prices are high.
Most marketing strategies require time and money. Hubers called on lending institutions, grain buyers and merchandisers to help growers. “Grain buyers and merchandisers can help by combining an option with a cash contract to help manage risks.”
He recommends thinking of marketing costs as another item in the budget. “It's just like crop insurance,” he says. “It's difficult to spend it, because if you don't use it, you won't ever see it.”
Ultimately, “it's our responsibility to insure ourselves a profit,” Hubers says.
Don't be afraid to ask for help. Consider hiring a marketing consultant. “Ask your lender to help you,” Hubers says. “Ask buyers to be creative.”
A marketing strategy prevents you from being seriously wrong in the markets.
“Make it a goal to get in the top one-third of the price range,” Hubers told the producers.
Other speakers urged growers to look at alternatives.
Braswell Milling Company of Asheville, N.C., has had success in the organic egg business. “We have a need to grow this business 20 percent in 2004,” says Russ Powell of Braswell Milling Company.
The company uses 20,000 tons of certified organic feed each year. “We want to buy grain here in North Carolina,” Powell says. Few North Carolina farmers, however, grow organic grain crops.
He says the company pays producers extra for soybeans and corn during the 3-year transition period to organic production. Organic soybeans are now in the $15-$16 per bushel range. “Organic beans could be in the $20 per bushel range by summer. Organic corn is $5.25 and could be $6 a bushel by summer.
“We hope farmers will have an interest in organic products,” Powell says.
Dennis Tucker of Archer-Daniels-Midland, says flour consumption is down to 137 pounds per person from 146 pounds per person a year ago. He says the protein-based Atkins diet is largely to blame. “The Atkins diet has affected milling.”
He, too, says organic production is an alternative for producers. Organic soft red wheat is currently bringing about $6 a bushel, compared with $3.25 for conventionally grown soft red wheat. Wheat for straw is also a growing market.
He encouraged producers to “be nimble and keep your ears open to where the niche markets are.”
Sybil Bullard of J.R. Jones Grain Inc. suggests the development of a grain specifically for livestock feed.