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Take advantage of available profits

by Devin Schierling

As final field preparations are nearing completion and the first seeds of the 2013 wheat crop are going into the ground, it’s important to step back and look at your operation’s marketing plan.

The foundation of this plan is the revenue guarantee provided through Federal Crop Insurance. The base crop insurance price was established at an all-time high of $8.78 for the upcoming year. This price, along with the Actual Production History (APH) increase from the Trend Adjustment, (TA) has provided producers with the ability to insure guaranteed revenue that is greater than the expected cost of production.

Integrating your crop insurance into your grain marketing is the next step in creating a profit-based marketing plan. There are many factors (out of our control) that affect the new crop value of wheat. Whether it’s the drought in the Ukraine and Australia or increased planted acres in the United States driving the price, when was the last time you were able to contract $8 (plus) wheat? . I’m not certain what $8 (plus) wheat will look like from a price perspective nine months from now, but from a profit perspective we have only seen this type of opportunity once in the last ten years.

One of TMA’s Foundational Principles of Risk Management is to lock in profit when profit is available. With your largest expense-fertilizer-primarily applied, it’s time to identify what your risk management needs are for your operation and develop a customized plan to take advantage of today’s profit potential.

   

The Best Kept Secret

Over the years you have seen several different articles from TMA about the value of delivering grain to your local elevator. We have emphasized the customer service you receive and how delivering grain to your local cooperative helps support the local communities. We have also emphasized the fact that the cooperatives in south central Kansas are reinvesting in their infrastructure to meet the needs of the producer. What we realize we hadn’t explained was the earning potential you have with your local cooperative that you don’t have with other grain handling companies.

Read more: The Best Kept Secret

   

Find us online

TMA can now be found on Facebook, Twitter and YouTube! Find TMA on Twitter by logging onto your personal account and searching for @TMAgrain, and then follow us! We will provide you with grain calls and industry news. New to Twitter? Setting up a new account is easy. Go to www.twitter.com and sign up for a new account on the home page. We can be found on Facebook at facebook.com/tmagrain. TMA’s Facebook page will provide you with industry news, a weekly Farm Margin Report published on Fridays and photo updates of activity from around the territory. And if you missed a Farm Margin Report, don’t worry! You can find them on TMA’s YouTube channel. youtube.com/tmagrain.

   

Margin Creators vs Price Predictors

The concept of price is ingrained into our minds at a very early age. Recently while our family was watching television my oldest son Karson piped up and said, “Daddy, I just saved a bunch of money on my car insurance!” My first blush was that he didn’t understand what car insurance even was, but his next statement told the real story. Karson responded by saying, “It’s when you wreck your car and they give you money to buy a new one.” In today’s society the focus on price and the pressure to get the best deal (whatever that maybe) has created an environment where our individual business decisions are the focus and not the final results of all the decisions.

 

Read more: Margin Creators vs Price Predictors

   

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