Grain Marketing Models

Jean-­‐Guy  Vaillancourt  ACORN  November  2015  

www.homesteaorganics.ca    

Homestead  Organics  

•  Who  are  we/Who  am  I  •  What  is  grain  markeHng?  •  What  should  you  consider  when  markeHng  grains?  

•  Type  of  buyers  •  Method  of  selling  •  Market  tendency  

Who  we  are  •  Between  OOawa  and  Cornwall  in  Eastern  Ontario  – Started  on  the  family  crop  farm  in  1988  – Split  processing  from  the  crop  producHon  in  1997  

•  Organic  whole  grain  services  – Storage,  cleaning  for  food  &  feed,  markeHng  

•  Organic  livestock  feed  – Complete  grain  raHons,  bulk  and  bagged,  thru  dealers  

•  Organic  farm  supplies  (seed,  supplements,  etc)  •  Support,  educaHon,  networking  

Where  do  I  fit  

•  I  am  the  grain  trader  for  Homestead  Organics.  •  In  charge  of  buying  crops,  quality  assurance  and  negoHaHons.    

Grain  MarkeHng  

How  to:  •  Sell  grains  •  Search  for  prices    •  Find  a  contract  that  suits  your  needs.  

ConsideraHon  

•  What  are  you  selling?  •  What  is  the  quality  of  your  product?  •  When  do  you  want  to  sell  it?  – Cash  flow,  weather,  storage  capacity  

•  Where  do  you  want  to  sell  it?  •  What  are  the  specificaHons  to  meet  for  the  preferred  buyer?  

•  What  is  your  BACK  UP  PLAN!  

Method  of  selling  

•  ContracHng    – Pre-­‐harvest  – Post  harvest  

•  Spot  price    •  InviHng  mulHple  buyers  to  visit  a  group  of  farmer’s  and  talk  about  the  prices  they  will  be  buying  it  for.  

•  Trading  

Type  of  buyers  and  learn  how  they  work  

•  AnalyHcal  •  Driver  •  Amiable    •  Expressive  

How  to  personally  scan  the  market  for  current  pricing  

•  Call  mulHple  buyers  asking  for  prices.  •  Search  online    •  Search  online  for  past  organic  trends  prices  and  expectaHons.  

•  Talk  with  some  farmer’s  in  the  same  situaHon  as  you  and  talk  about  prices.  

What  is  best  for  you  

•  Determine  when  selling  is  best  for  you.  •  Do  you  like  rushing  at  the  last  minute  to  try  and  sell  it  at  a  (stable,  beOer,  lower)  price.  

•  Do  you  need  a  plan  by  planHng  Hme?  •  Do  you  need  to  meet  cash  flow  obligaHons?  •  Prepare  mulHple  plans    •  Do  you  prefer  contracHng  at  a  set  stable  price?  •  Do  you  like  speculaHng?  •  Understand  the  details  in  the  contract.  

When  talking  money  

•  Determine  the  type  of  transacHon.    •  Obtain  transportaHon  quotes  if  you  need  to  pay  for  delivery.  

•  Work  around  the  pick  up  day.  •  Payment  method  and  Hmeline    •  Make  sure  it  feels  right  to  you.  •  Depends  on  the  buyer  (farmer,  trader,  processor)  and  their  margins.    

What’s  your  general  situaHon  

•  Buyers  do  not  know  about  you.  – And  you  may  not  know  the  buyers.  

•  Allow  $20-­‐$70  per  tonne  in  shipping.  – Either  way  –  affects  market  price.  

•  Know  the  market  pressures  –  If  a  local  shortage,  add  $40  as  replacement  cost  –  If  local  surplus,  subtract  $40  to  reach  markets.  

•  Feed  market/infrastructure  to  be  developed.  

What  to  do  

•  Beware  of  a  volaHle  market.  •  On-­‐farm  storage  is  the  best  strategy.  •  Contract  some:  – predictable,  reliable,  profitable,  Hmely  cash  flow.  

•  Spot  some:  – speculaHve  opportuniHes.  – watch  your  nerves;  sHck  with  your  commitments.  

•  Choose  your  buyer:  – RelaHonships,  reliability,  compaHbility,  paHence.  

Grain  MarkeHng    

•  Any  quesHons?  

Past  market  trends  from  Homestead  Organics  

•  Good  way  to  predict  the  future  is  looking  in  the  past.  

Homestead  past  market  trends  

Organic  Soybeans  past  trends  

What’s  to  come  

•  You  can  never  be  to  sure.  •  What  is  coming  up?  •  What  seams  to  be  stable?  •  What  is  coming  down?  – Many  more  acres  coming  into  organic  producHon.  – Good  organic  produciton  in  eastern  Europe  &  Asia.