Art of Grain Merchandising

5 Steps to Break-Even Analysis

Posted by Jeff Reardon

Jul 21, 2017 10:16:36 AM

The first step is to eliminate break even from the discussion, no grain company is in business to break-even. Decide on a profit target and this analysis will help to shape the necessary decisions to achieve the goal. Each region and location is different, but for this example the grain industry net profit target is set at 2.5 % of sales before taxes. A company with $30 million in sales will then have a profit target of $750,000. Keep in mind a 2.5% profit is 10 cents on $4.00 corn.

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Topics: Grain Merchandising

How to Originate Grain by Capitalizing on Delayed Payments

Posted by Chance Wood

May 23, 2017 7:55:00 AM

Year after year the most successful grain companies are those that execute a plan to acquire the majority of their ownership before harvest.  Likewise, the most successful farm marketing plans include selling grain when include locking in profitable prices before harvest for delivery at harvest or after.  So if it is advantageous for both parties to take action before harvest, why isn’t this commonplace? 

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Topics: Grain Origination

3 Skills to Master for Successful Grain Origination

Posted by Kelli Frazier

May 15, 2017 10:44:59 AM

Grain origination isn’t exactly easy.

Successful grain origination programs take time and resources to develop. Since your ability to originate grain has a direct impact on your bottom line, it’s easy to see why origination can be such a competitive aspect of the grain business. We can help you gain a competitive edge by addressing the 3 Keys to Grain Origination Success: Communication, Customer Focus, & Credibility.

 

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Topics: Grain Origination, Farmer Marketing

4 Steps to Create a Financial Dashboard

Posted by Jeff Reardon

Mar 7, 2017 1:06:47 PM

Financial dashboards are an efficient way to integrate long term goals into your monthly management process. The most effective dashboards have simple easily understood metrics that clearly lead to achieving the long term financial goals of the organization. Financial ratios may not crank the corporate engine but clearly stated working capital and debt balances are a great way to communicate with management teams.

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Plug the Leak & Build Higher Sides

Posted by Roger Gattis

Feb 27, 2017 3:08:59 PM

On the farm, you’re likely never very far off from having to plug the next leak. The tire on the planter, the head gasket on the service truck or that hydraulic hose on the tractor; it seems like there is always something leaking, at least that’s how it was around our place! The instance that comes to mind from my childhood is that of a small, leaking cattle pond on a piece of ground dad bought. When the spring rains came that pond would not only fill up, but it would easily overflow due to its shallow banks. The greater tragedy was that not only could it not hold more of that runoff, but that it also had a slow leak so that by early summer, just as we needed that water the most, the pond was nearly dry. Dad would say that pond got us “comin’ and goin’”. Knowing full well that bemoaning the fact that this scene played out year after year would do absolutely nothing to fix the problem, dad decided to do something to remedy the situation. And as he knew from personal experience the yearly cycle of spring rains and summer droughts so prevalent in western Arkansas, he had high certainty to believe that this cycle would repeat again the upcoming year.

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Topics: Grain Origination, Farmer Marketing

Three Keys To Financial Success In 2017

Posted by Jeff Reardon

Dec 6, 2016 10:05:08 AM


Efficiency is the word I hear most often when talking with grain company CFO’s. The Sales, Operations, and Finance business segments need to be reviewed and managed with an eye toward profitability. Creating an environment where each segment is pulling in the same direction can be elusive. How can sales grow and operations receive the capital necessary to be successful if the company is not growing its profitability ratios and equity?

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Why Low Grain Prices Lead To Higher Costs (And Why They Don’t Have To)

Posted by Jason Wheeler

Aug 23, 2016 11:00:00 AM

Some costs in business are unavoidable. Production Agriculture is no different. It seems like everyone is trying to take a piece from you at every turn sometimes and you are the one taking all the risk and feeding the world. You try and cut costs where you can and be as efficient as possible, but there is just a lot that goes into producing grain. It takes land, seed, fertilizer, chemical, fuel, equipment, and labor just to name a few. No matter the year or the circumstances, you have to pay those bills and many others.

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No One Wants To Be A Mushroom

Posted by Sherry Lorton

Jul 26, 2016 10:18:51 AM

In our last Grain Accounting class the discussion turned to the importance of having a good banking relationship. A lender in the meeting made the comment “just don’t treat me like a mushroom.” With a lot of puzzled looks staring back at him he went on to explain, “you know … keep me in the dark and shovel on the manure.”

While his comment got a good chuckle from the group it also rang with a lot of truth. It hit home not just with the lenders but all who are a part of the grain merchandising team … the merchandiser, the accountant, the lender and upper management. Sometimes it feels like you’re being left in the dark about what’s going on with the numbers.

Maintaining an open line of communication is difficult in many businesses but it can be especially so in a grain-focused basis trading operation. The challenge is that the different sectors of the operation seem to hold different pieces of the puzzle. Until all pieces are put together no one really has a clear view of what the picture looks like. Let me give you a few examples:
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Topics: Mark-to-Market

Grain Origination Comprehension and Competency

Posted by Roger Gattis

Jul 19, 2016 11:00:00 AM

As a member of the grain elevator community, we often wear multiple hats over the course of a season; accountant, PR rep, grader, dispatcher, merchandiser, etc. Sometimes we have no choice but to wear all the hats simultaneously (looking at you, feedmill-rejected truck load of wet corn at 5:00 on a Friday). However, this time of year a lot of us are focusing pretty hard on one job in particular; that of the grain originator. Ever since the first market rally of the spring a few months ago efforts to get grain bought have kicked into high gear. Coupled with the fact that we now stand on the cusp of what appears to be another good crop, now is a critical time to determine just how effective your origination program truly is. If we do indeed have a big crop, the situation is shaping up to be one in which bushels could be competing for space, instead of the other way around. Does your origination plan address this possibility; that is, are you in a position to control your space and help the farmer sell profitability when the opportunity arises?

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3 Key Points for CFOs in the 2016 Grain Merchandising Season

Posted by Jeff Reardon

Jun 7, 2016 11:00:00 AM

The word is out; grain merchandising margins are down all over the grain industry. Publicly traded and private companies are showing financial stress on their recent quarterly reports. In the high volume, low margin, capital intense grain industry, planning will separate the high achievers this harvest. As a group we still have a crop and a half to buy, will you buy it with a purpose or will you let it happen to you? Today is the day to work through your plan for new crop. Adding pennies or fractions of cents per bushel to your net margin through thoughtful preparation is essential to success this harvest.

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