By Lacey Gerbrandt, FarmLink Marketing Advisor
Farm operations are annually faced with an unprecedented level of risk. There are risks in the additional expenditures necessary to maximize yield potential, and risk involved in not marketing your crop throughout the year at the opportune times. Let’s say, for example, that you apply the necessary amount of fertilizer for your soil, you spray your crop efficiently, you see the benefit in applying fungicide and in some cases you may have to repeat, there is potential of insects so you spray for them as well, you desiccate to get your crop off in a timely fashion, and you still have the risk of substantial amounts of rain (witnessed way too much this year), hail, plow winds, or an early frost, not to mention the risk of drought throughout the growing season. Not marketing properly delivers the same level of risk. Not having a plan and not following the market trends and outcomes equals millions of dollars of lost revenue. You have taken the risk of putting in every effort to grow a great crop; you need to make every effort possible to market it efficiently, manage your cash-flow/storage with planned, strategic sales, and sell your crop in top range of prices throughout the year!
Like the risk involved in investing several dollars into inputs, there can be substantial risk in forward contracting grain before it is harvested. However, in many cases, to get in on the top range of prices, beat the market on logistical challenges and harvest pressure, and service your cash-flow/storage needs, forward contracting is very necessary. Some of the biggest and best sales I made with my growers in the 2013/14 crop year were made well before harvest. FarmLink saw the potential that the crop was ramping up to be huge and burdensome to logistics and made recommendations accordingly. Growers who waited for production to advance, left many dollars on the table by not contracting soon enough. The main crops that stand out to me were durum, peas, and canola (three major crops grown in this area).
Moving on into the 2014 crop year, we have witnessed first-hand where production contracts and potential buy-outs may come to fruition. With our FarmLink clients we have made moderate contract decisions that we are confident to have the production to fill them. However, with the constant rains we have been experiencing (this was written on September 5th), there may be fears of meeting quality requirements all across Western Canada. Moving forward I am all in favour of Global Ag Risk Solutions. This will be a huge advantage to have the freedom to forward contract our commodities.
With Global Ag Risk Solutions, growers are guaranteed a minimum revenue stream. This was brought to my attention early on in the spring when I was having a meeting with a FarmLink client. We were planning our strategies for the year and he said to me, “Lacey, I cannot lose money on my farm this year. It may sound outrageous and this is the first time I can say that, but with Global Ag Risk Solutions, I am covered to make the best, most strategic decisions for the good of my farm!” This spoke volumes to me and I have been investigating it ever since.
Some of the areas that I work in have been hit so hard this year with hail, extreme winds, untimely rains, and torrential down-pours. We are still very much at risk for early frost and morale is down right now across the Prairies with harvest hours being limited each day by heavy dew and crops getting tough as soon as the sun goes down. The Global Ag Risk program not only alleviates the fear of adding the proper inputs to the crop (without additional premiums), but it allows us to aggressively sell without any fear of contract buy-outs or unexpected downgrading.
Moving forward I urge all growers to analyze the risk on their operations and manage it accordingly. Emerge Ag Solutions, FarmLink Marketing Solutions, and Global Ag Risk Solutions are a great place to start. Please call/email me at any time with questions/concerns, or to arrange a meeting. Soon I will also be able to invite you to stop by and see me in the new Emerge Ag Solutions office!
I wish you all the very best for continued farming success, health, and prosperity!