Art of Grain Merchandising

Grain Origination Comprehension and Competency

Posted by Roger Gattis

Jul 19, 2016 11:00:00 AM

farmer.jpgAs 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?

If so, great. Now comes the tougher question; do your customers understand why you buy grain the way you do, and why you don’t buy grain the way you don’t? It is one thing for us to have a keen understanding and awareness of why we offer the origination programs that we do, but do our customers share in the same comprehension? Taking this thought experiment one step further, if our customers do truly understand why we utilize simple profit per acre based target contracts instead of bull-floor-butterfly-double obligation contracts, do they demonstrate competency towards this end? That is, do they act on these offerings? A lot of folks comprehend the idea that recycling is a good thing for society, but how many in the general population are competent recyclers?

I recently conducted a poll on Twitter aimed at trying to get a handle on this very idea of comprehension and competency. The folks I follow, and those that in return follow me, on this platform include many grain elevator folks and farmers from across North America, so I feel like had covered a good demographic for such a survey. I posed this question: Do you think that most farmers believe grain marketing is a zero sum game with buyers? Yes or No. What would your guess be as to the percentage of respondents that fell into each camp? 59% replied that YES they do indeed believe most farmers feel that way. This should be an indication that maybe the reason some of us aren’t getting the amount of grain bought that we think we should, especially given the recent rallies in farm commodities, is that our producers may not have as good an understanding of what we’re trying to accomplish in our origination programs as we think they do. And without this comprehension, how can we expect them to competently act upon these opportunities?

A good friend of mine once said, “Before you can solve the puzzle, you have to make sure all the pieces are picture side up.” Assuming we know our customers’ perception of our origination programs can and will lead to frustration by one party or the other. Take the steps necessary to show them what the end picture should look like, and stay on message. Is the next bushel that comes in one that is mutually beneficial to all involved? It should be.

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